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Legal guides written by Adeola Oyinlade & Co:
Restructuring and insolvency law refers to the set of legal principles and procedures that govern how financially distressed companies, or individuals, manage their obligations in Lagos, Nigeria. This field addresses circumstances in which businesses or persons are unable to meet their financial commitments, offering options either to reorganize their affairs and return to profitability or to wind up operations in an orderly manner. Lagos, being the commercial hub of Nigeria, sees a significant number of restructuring and insolvency matters. These proceedings are designed to balance the interests of debtors, creditors, employees, and other stakeholders, ensuring fair and transparent resolution of financial distress.
Legal guidance is crucial when dealing with restructuring and insolvency issues due to the complexity and significance of the consequences. You may need a lawyer in the following situations:
The primary legislation governing restructuring and insolvency in Lagos, Nigeria, is the Companies and Allied Matters Act (CAMA) 2020, along with relevant provisions of the Bankruptcy Act and guidelines issued by regulatory agencies such as the Corporate Affairs Commission (CAC) and the Securities and Exchange Commission (SEC).
Key aspects include:
Restructuring involves reorganizing a company's operations, finances, or ownership to restore profitability. Insolvency means that an individual or company is unable to pay debts as they fall due. Restructuring can be a preventive measure, while insolvency involves legal proceedings to address unpaid debts.
Insolvency proceedings can be initiated by the debtor, creditors, or by regulators in certain circumstances, such as when a company is unable to pay its debts.
Options include debt restructuring, seeking new investment, entering into a scheme of arrangement with creditors, asset sales, or, in extreme cases, winding up or liquidation.
A scheme of arrangement is a court-supervised agreement between a company and its creditors (or shareholders) that allows for the restructuring of debts, operations, or equity, subject to approval by the court and creditors.
The law establishes a payment hierarchy. Secured creditors are typically paid first, followed by preferential creditors (such as employees' wages), and finally unsecured creditors.
Yes, individuals can be declared bankrupt under the Bankruptcy Act if they cannot pay their debts. The process involves court proceedings for assessing the debtor's liabilities and assets.
Employees are classified as preferential creditors, meaning they are entitled to receive unpaid wages or entitlements before many other creditors during insolvency proceedings.
Receivership occurs when a secured creditor appoints a receiver to take control of specific assets, usually to sell them to recover an outstanding debt owed by the debtor company.
The CAC oversees company registrations, filings, and compliance. It plays a regulatory role during company restructuring or insolvency, including the registration of court orders or schemes.
Not all cases require court intervention. Voluntary arrangements, out-of-court agreements, or private restructuring are possible, but formal insolvency processes usually involve court oversight.
For more help regarding restructuring and insolvency in Lagos, consider reaching out to these resources:
If you are dealing with a potential restructuring or insolvency matter in Lagos, it is important to:
Taking these steps will help you understand your rights, obligations, and the most effective way to resolve financial distress in compliance with Lagos and Nigerian law.
