INSOLVENCY EXCELLENCE IN

CHALLENGING TIMES

Okorie Kalu

PUNUKA ATTORNEYS & SOLICITORS

6th December, 2021
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 OUTLINE
Introduction

Understanding the Times and the role of Excellence

Excellence in choice of insolvency tools

Excellence in Insolvency Office

Management & Insolvency Excellence

Directors and Company’s solvent/insolvent life cycle

Insolvency Excellence from a policy, legislative and judicial

viewpoint

Case Studies
Introduction
Excellence generally is the ability to stand out despite surrounding circumstances being on a
free fall

The Nigerian factual matrix: the personification of VUCA

• The covid-19 pandemic,
• dwindling oil prices,
• insecurity
• devaluation
• and inflation
• No bailout
• No special legislative reform
Understanding the Times and
the role of excellence

The result of the foregoing is challenges in doing business and business

continuity
While several countries have amended and/or enacted legislations that
would cushion the effects of these supervening events on businesses
while balancing the interests of counterparties, this is not the situation
in Nigeria.
This presentation shall examine and analyze how to thrive and excel in
this uniquely challenging environment .
 Excellence in choice of insolvency tools
Application of
insolvency tools to Available options in CAMA 2020;
the business • Administrative Receivership? (see also AMCON Act 2015
operations and as amended)- involuntary but dependent on IP
structures of an orientation): Management displacing
enterprise impact on • Liquidation (voluntary or involuntary)- quite flexible when
any or all the voluntarily driven (in the shadow of the Court and of the
underlisted Regulator? Or with the backing of the court and
restructuring tools being available to IP?
• Business • Arrangement and Compromise;: Administrative. Court
Continuity; checked. SEC sanctioned (fairness). Minority displacing.
Possibility of moratorium protection
• Culture;
• Company Voluntary Arrangement;(Management
• Management and
retaining. Arguably greater equity and buy in of creditors
allocation of Risks; and members. IP a midwife. No moratorium protection.
• Emergence of new No framework rules
opportunities. • Company Administration; Discretion to retain or displace
management. Moratorium protection. flexibility
 Excellence in insolvency office
The business of insolvency is discharged in a highly charged emotional environment:
 Shareholder or Director who has lost a business/control
 Different Creditors more or less protected
 Anxious employees
 An interested party looking to buy assets and has been out bidded, etc
•Excellence in skillsets (understanding where to wear the hat of a peacemaker, where to be ferocious, where to
play by the rules)

•Excellence in risk taking and risk management (self interest, advocacy, familiarity, intimidation, etc threats)

•Understanding the limits of various insolvency offices, and the regulatory constraints to same. See Section
704 – 709 of CAMA.

• Five fundamental principles Insolvency & restructuring Practitioners must adhere to, these are:
•Integrity
•Objectivity
•Professional Competence and Due Care
•Confidentiality
•Professional Behavior
 Management and Insolvency
Excellence

“Where a company is insolvent or of doubtful solvency or on the verge of insolvency and it is the creditor’s
money which is at risk, the directors when carrying out their duty to the company, must consider the
interests of the creditors as paramount and take those into account when exercising their discretion”

Per Leslie Kosmin QC in the case of Colin Gwyer & Associates Ltd v. Palmer [2002] EWHC 2748
 DIRECTORS & COMPANY’S SOLVENT & INSOLVENT
LIFECYCLE

• Leadership
• Compliance
• Risk management
• Strategic planning
• company’s positive image
• Vision and mission
• Determining policies
• Act with good faith
Okeowo & Ors V. Migliore & Ors (1979) LPELR-2441(SC) (P. 120, paras. C-D)

• PERSONAL RISK EXPOSURE. NO TIME LIMIT. ANY TRANSACTION (See Section 305(1)-(3), 306, 309, 658, 659,
672, 673 CAMA 2020
• Early mitigation actions: embedded commercial options and safeguards, choice of dispute resolution and even
restructuring preference, ipso facto clauses, professional advice, professional indemnity, use of solvent (A&C,
M&A) and insolvent restructuring option tools, supervised informal workouts and negotiations
 Insolvency Excellence from a policy, legislative, and
judicial viewpoint

Excellence here is predicated on a responsive and dynamic adaptation of the framework

and key stakeholders to facilitate business continuity, bailout and or restructuring. These
include amongst others:
• Procedural framework rules to facilitate implementation of rescue procedures
• Capacity building for judicial officers/specialization and body of knowledge
• Efficient Regulator and effective delegation cum deferrence
• Introduction and regulation of Post-Commencement Financing which will encourage business rescue;
• Autochthonous adoption of UNCITRAL Model Law on Cross-Border Insolvency;
• Enactment of a proper framework for personal and consumer bankruptcy;
• Enactment of Special insolvency regime for MSMEs in Nigeria.
Case Studies

 Re: Akinwunmi & Kalu – Pioneer CVA case in Nigeria (ongoing)

Re: Project A – Possible pre-pack Company Administration Proceeding

in Nigeria (ongoing)
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 Thank you
Q and A Session