The Federal High Court Headquarters has announced the creation of an ‘Insolvency Unit’ for the Court, aimed at addressing the implementation of laws relating to company restructuring and dissolution in Nigeria.
According to the court, the laws related to “Company Voluntary Arrangements (CVA), Administration, Receivership, Winding Up (Dissolution), and various forms of restructuring of companies” in Nigeria.
The unit was created following approval by the Chief Judge of the Federal High Court, Justice John Terhemba Tsoho.
This was disclosed in a statement signed by Sulaiman Amida Hassan, Esq., Chief Registrar, Federal High Court of Nigeria, and made available to Nairametrics on Sunday.
Intention for Insolvency Unit Creation
- According to the registrar, the creation of this unit is pursuant to the provisions of the Companies and Allied Matters Act, 2020, the Asset Management Corporation of Nigeria (AMCON) Act, 2019 (as amended), the Nigeria Deposit Insurance Corporation (NDIC) Act, 2024, and the Bankruptcy Act, Laws of the Federation of Nigeria, 2010.
- The registrar stressed that the functions of the Insolvency Unit are to oversee the effective implementation of the provisions of the above enactments as they relate to Company Voluntary Arrangements (CVA), Administration, Receivership, Winding Up, and various forms of restructuring of companies.
“The unit is created in line with global best practices on insolvency and to also provide specialized and standardized services on insolvency matters,” the official added.
- The registrar explained that the unit offers insolvency practitioners a dedicated channel for supervisory and enforcement services amid the court’s quest for modernization and updating insolvency practices and proceedings in Nigeria.
- The Court advised stakeholders to take advantage of the unit to offer fast-track services required in the implementation of its mandate.
What to Know About Companies Winding Up
The Federal High Court has jurisdiction over the creation, formation, and operations of companies, among other company-related matters.
According to the Companies and Allied Matters Act, the various modes for winding up (dissolving) a company are by the court, voluntary winding up, and winding up under the supervision of the court.
- In the case of winding up by a court, a petition is filed by a petitioner (another company, creditor, contributory, contractor, etc.), who claims an entitlement based on debt.
- The court will review the evidence before passing an order for or against the company’s dissolution.
- The voluntary winding up of a company is initiated either by its shareholders or creditors, where the company is proven to be insolvent (unable to pay its debt).
- A winding up under court supervision occurs when a special resolution by the company is forwarded to the court, asking it to supervise the company’s dissolution.
