Stakeholders have expressed support for a new bill that repeals and re-enacts the 37-year-old Bankruptcy and Insolvency Act.
The new bill – Bankruptcy and Insolvency (repeal and re-enactment) bill, 2015 – also provides for corporate and individual insolvency to provide for the rehabilitation of the insolvent debtor as well as create the Office of the Supervisor of Insolvency.
At a public hearing on the bill in Abuja, the Central Bank of Nigeria (CBN), Federal Mortgage Bank of Nigeria, Asset Management Corporation of Nigeria (AMCON), Federal Ministry of Finance, among others, were unanimous that the repeal and re-enactment of the current Act was long overdue, adding that most of its provisions were no longer realistic and sustainable
Specifically, they lauded the increase of debts actionable as bankruptcy from N2,000 in the current law to N1 million in the new bill.
Declaring the event open, Senate president, Bukola Saraki, assured that the repositioning of the Nigerian economy to effectively meet the challenges of the 21st Century was a major priority of the current Senate.
Insolvency system and practice, the Senate president said, played an important role in attracting both domestic and foreign investments as well as promoting investments and entrepreneurial development, adding that, “given these opportunities, there is urgent need for us to repeal and re-enact this Act, which has become obsolete and out-dated.”
Saraki, while reiterating the commitment of the Senate in delivering on its legislative agenda to enable the executive effectively undertake the diversification of the economy and expand people’s opportunity to contribute to better governance, noted that, “however, this requires all hands on deck; we cannot do this alone.”
But dousing the fears of AMCON managing director, Ahmed Kuru, that passing the bill into law would contradict some sections of the AMCON Act, chairman, Senate Committee on Banking, Insurance and other Financial Institutions, Rafiu Ibrahim, assured that the committee would not do anything to jeopardise the AMCON Act.
The bill, he said, was targeted at re-vitalising and enhancing the operational frameworks on bankruptcy and insolvency matters to strengthen their applicability in addressing challenges in line with international best practices.
“Conceptually, bankruptcy is a successful legal procedure that results from an application to the relevant court by a legal entity or a person to have themselves declared bankrupt or by a creditor of a legal entity or person in order to have the legal entity declared bankrupt. It could also imply a special resolution which legal entity files with the Registrar of Companies in order to be declared bankrupt.
“We all know the importance of AMCON in the financial sector of this country. And we will not do anything to jeopardise the powers embedded in the AMCON Act. We are willing to work closely with AMCON to roughen all the edges so that AMCON is not adversely affected but we must achieve the set objective of this bill,” he said.
Although the AMCON boss supported the bill, he said Sections 4, 5, 12, 13 and 68 would contradict Sections 51, 48, 35(4) and 35(2) of the AMCON Act, respectively.
Similarly, head of AMCON legal team, Oluseye Opasanya, argued that Section 60(z) of the AMCON Act made it clear that the legislative intention of the Act was to accord supremacy to the provisions of the Act, when in conflict with other statutory provisions.
The bill, which was referred to the committee on November 3, 2015, comprises of 13 parts rendered in 269 clauses, as against 143 clauses in the existing Act.
In his presentation, Richard Esin, acting MD/CEO, Federal Mortgage Bank of Nigeria, submitted that the inclusion of dollars in some provisions of the bill should have been replaced with naira, even as the Federal Ministry of Finance said the current law was no longer in line with current economic realities.
“The new bill is a good innovation and improvement on the current Act. It provides several improvements and financial seal in reality with current economic situation in the country,” Amaka Odili, deputy director (legal), Federal Ministry of Finance, told the committee.
Godwin Emefiele, CBN governor, faulted the provisions where references were made to dollars instead of naira when a creditor was filing a claim
Represented by Olasukanmi Gbadamosi, director, legal services department, CBN, the apex bank boss said some foreign components embedded in the bill were not in tune with the Nigerian environment.