An Examination of the Effect of the Acquisition of An Eligible Bank Asset of an Insolvent Company by AMCON on the Status of the Company’s Liquidator

Description

ABSTRACT

An Examination of the Effect of the Acquisition of An Eligible Bank Asset of an Insolvent Company by AMCON on the Status of the Company’s Liquidator

Lawrence B Ochulor*

The establishment of the Asset Management Corporation of Nigeria (AMCON) by the Asset Management Corporation of Nigeria Act, 2010 (The AMCON Act, 2015 as amended), is a direct intervention of the Federal Government of Nigeria to revamp the banking sector by purchasing toxic debts of financial institutions. The extent and exercise of some of the rights and powers vested on AMCON is a subject of divergent legal views. This article considers the acquisition of eligible bank asset by AMCON and the legal implications of the acquisition on the status of a liquidator specifically appointed for liquidating the affairs of a debtor company. The author identifies and addresses the traditional rights of mortgagee in a typical loan/mortgage transaction, and thereafter, examines relevant provisions of the AMCON Act, with the view to identifying the interest vested in AMCON upon acquisition of an eligible bank asset, and whether AMCON acquires and could exercise more rights than its predecessor in title (the Eligible Financial Institution), in relation to the acquired bank asset. The paper investigates the status of a liquidator appointed for a debtor company upon AMCON’s acquisition of an eligible bank asset in relation to the said debtor company and whether AMCON’s acquisition of the eligible bank asset truncates his appointment. The paper examines who as between the liquidator and a receiver/manager appointed by AMCON would exercise wider right and control over the assets of the debtor company. The methodology adopted in this work is analysis and synthesis of relevant statutes and case law. Appropriate references are made to relevant legal literature. At the end, the paper found sufficient legal basis to conclude that AMCON’s acquisition of an eligible bank asset does not truncate the appointment of a liquidator for liquidating the affairs of a debtor company, and that the liquidator should exercise wider right and control over the assets of a debtor company.

Keywords: AMCON, Liquidator, Insolvency, Eligible Bank Asset, Debtor company, Receiver/Manager.

INTRODUCTION
AMCON is a statutory corporation and agency of the Federal Government established by an Act of the National Assembly – the AMCON Act.₁ The AMCON Act has been amended twice, in 2015 and in 2019. The AMCON Act in section 4 provides that the objects of the Corporation shall be to:- (a) assist eligible financial institutions to efficiently dispose of eligible bank assets in accordance with the provisions of this act; (b) efficiently manage and dispose of the eligible bank assets acquired by the corporation in accordance with the provisions of his act; and (c) obtain the best achievable…

* LL.B, BL, ACIArb. Associate at Babalakin & Co. Legal Practitioners. Email:

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1.  Act No 4, 2010.

THE GRAVITAS REVIEW OF BUSINESS & PROPERTY LAW VOL.11 NO.3