A company liability exposes it to action for insolvency and court winding up or voluntary wind up.
The concept of receivership in Nigeria is governed by extant laws of the land. In this blog post, we shall deal extensively on receivership in Nigeria, who can become a receiver in Nigeria, receiver/ manager and how to become a receiver in Nigeria Under the Nigerian Laws.
The gamut of receivership deals on companies’ assets and liabilities, and as a result, a company that is insolvent, as opposed as being declared bankrupt, is handed over to another person capable of taking charge of the company’s assets and distributing it to the creditors.
In a situation a company becomes insolvent, the options available to the creditors, in recovering their funds invested in the companies is through the process of receivership.
A Receiver could be court appointed or as provided in the instruments of the company (memo and articles of association of the company).in this case there is a voluntary appointment of a receiver, who now steers the management of the companies assets and liabilities. A receiver could be appointed to manage or control the whole or part of the properties (assets of the company).
The application to the corporate affairs commission, by the company is followed by a notice of filing for liquidation to the general public. the notice shall include the fact, that there have been an application for voluntary liquidation, and that the special resolution of the company for liquidation has been published in national dailies, the notice will now exactly mention the receiver appointed to now oversee the liquidation of the company assets, and liabilities, and to further ensure that investors and creditors receive their funds.
Requirements when submitting the Application for Receivership/manager/Administrator/Supervisor on Voluntary Arrangement in a company in Nigeria:
Unlike the old dispensation, such is written to Cac as a formal letter, however the process is now completed with an online form. The Applicant shall however comply with the following as listed hereinunder.
- Exhibit Court order (where applicable)
- Attach Means of identification of the receiver.
- Do Newspaper Publication (where applicable)
In the event of an appointment of a receiver ,the company usually does that to kickastart the process of payment of creditors and investors in the company.
All the investors and creditors are to contact the receiver to able to receive theirs investment in the company.
Nigerian Laws Governing Receivership in Nigeria are:
- Companies and Allied Matters Act, 2020, (CAMA).
- Real estate laws such as the Property and Conveyancing Law;
- The Conveyancing Act 1881;
- Mortgage and Property Law; and,
- Mortgage Institutions Act, may also apply.
- Insolvency Regulations 2022