Recognition and Enforcement of Cross-Border Insolvency: Nigeria in Perspective
One of the challenges currently faced with Nigeria’s standing in relation to international trade is the adequacy of the country’s insolvency laws and regulations on cross-border insolvency. Trade has taken an international dimension over the decades, a corporation in one country will have interests – goods, assets, employees and claims in other countries.
During the life of a company and as it continues to trade, there is the likelihood for the company to fail such that its liabilities far exceed its assets and it goes insolvent. The question that then arises is how do companies that have businesses spread across different jurisdictions in the world deal with such business failure. Trite international principles suggest that the cheapest and most efficient method of dealing with this failu is to:
(i) institute one main insolvency proceeding (perhaps in the country of the company’s original incorporation or a favourable country, like the United States of America (“USA”), if the company has a place of business in the USA, or the company has assets1 in the USA); and
(ii) seek the recognition of the insolvency proceeding instituted in the main jurisdiction as well as seek the co-operation of the courts in such jurisdictions with its office holder (trustee, liquidator, or whatever name such officer is styled in the relevant jurisdiction).