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Although the governor of the Central Bank of Nigeria has reaffirmed the bank's resolve not to allow any deposit bank to fail, he stated that the near insolvency of certain banks, which necessitated the Central Bank's intervention in eight cases, stemmed principally from a lack of corporate governance and weak credit management practices. The Central Bank has devised various strategies to protect depositors.

This update looks at the Nigerian insolvency regime to determine the nature of business rescue in insolvency law and practice. It also looks at the relevance of new capital to business recovery and the legal impediment to obtaining new capital in business restructuring.

This update focuses on the treatment of account holders in the event of insolvency and includes an overview of the General Insolvency Framework and the special protection afforded to account holders in the banking and capital markets industries through special statutes. The update also analyzes the potential impact of the International Institute for the Unification of Private Law Convention on Nigerian insolvency practices.

The Federal High Court recently ruled on the amended winding-up petition brought by Diamond Bank Plc against Alan Dick and Company West Africa Ltd. The case offers contentious insolvency practice a unique opportunity to use the UK cross-border insolvency provisions to follow up on the insolvent company's assets in foreign jurisdictions and to call UK-based directors to account.