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Insolvency & Corporate Restructuring Services in Nigeria

Bulls Capital Limited is a registered professional services organization that is specialized in providing independent professional advice and solutions to financial institutions, businesses, the accountancy profession, as well as individuals in the field of corporate finance, recovery, risk management, recovery, special tax advice and commercial finance. We have more than 12 partners taking insolvency licenses and they handle largest number of insolvency appointments in the market, across all part of Nigeria.

Our corporate restructuring and insolvency team in Nigeria provides advisory services to Lenders, companies and individuals in difficult situations. Bulls Capital Limited has a good and successful history in restructuring and insolvency, and also ensuring a reliable team of accounting, tax, company law and advisory specialists give best advice to our clients so they can arrive at a favorable result.

We render different restructuring and insolvency services, ranging from:

  • Member’s voluntary liquidation: A process used to wind up the company. This is           a situation where an undeveloped company has completed its purpose and is In this situation Bulls Capital Limited will act as a liquidator, providing    financial and tax advice for the maximum return to the shareholders.
  • Receivership: This is a recognized process whereby a receiver is appointed by an entity with a charge over assets in corporate or personal ownership. The charge can be a fixed              or floating charge. The receiver’s duty is to take possession of the assets which are                subject to the charge and realise the value in these assets for the benefit of the charge
  • Court Liquidation: is a formal winding up of a company which involves the liquidator   being appointed by the courts. in response to the non-payment of a debt, the petition to                    wind up a company through the courts can be taken by a creditor of the company.

Therefore, Bulls Capital Limited will can assist through:-

  • Advising the company on the suitability or otherwise of the official liquidation procedure
  • Acting as the creditor/company’s nominee as official liquidator
  • Advising the creditor on the suitability of seeking a winding up of a debtor
  • Advising on the procedure of putting a company into liquidation
  • Service for Lender: in tangent with this particular service, Bulls Capital Limited offer a   range of services to secured lenders and financial institutions to examine the viability of a         business and assess all restructuring options available. We prepare Independent Business     Reviews which assess trade performance, trade risks and ultimately the borrower’s ability       to meet their repayments and we also:-
  • Provide advice to banks and alternative funders on how to deal with borrowers who        intend to put their company into examination
  • Take appointments as fixed charge receivers and receiver and manager for trading
  • Examinership: This is a court procedure which involves obtaining protection from the courts to assist the survival and restructuring of an insolvent company. It safeguards an        insolvent business from its creditors for a finite period enabling it to put in place a         survival plan and restructure its debts. In relation to this services, Bulls Capital Limited            experienced team can:
  • Provide advice and aids for High Court or Circuit Court application for the appointment of an examiner
  • We can prepare the independent expert’s report in support of a petition to the court for protection
  • Assist a company in determining whether it is suitable for examinership
  • Act as examiner on the nomination of the shareholders, directors or creditors

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 Creditor services: Bulls Capital Limited experienced team provide a full range of services to our clients dealing with difficult clients who are trying to achieve the maximum and          most timely repayment of debts. And this full ranges services includes:-

  • Assessing and implementing debt recovery strategies
  • Advising a company whose customer has entered an insolvency process
  • Attending at creditors meetings to represent our client.
  • Creditor’s Voluntary liquidation: This is the liquidation of a company that is unable to   pay its debts as they fall due. The process is introduced by the directors of a company                    where the company’s liabilities exceed its assets and is insolvent.

In such a situation, our insolvency team offer a range of liquidation services in behalf of directors, shareholders or creditors:

  • Advice and assistance to creditors including representation at creditor meetings and provide timely reports on the progress of the liquidation
  • Advising directors and shareholders on the proper procedures to be adopted in discharging their statutory responsibilities
  • Prepare a Statement of Affairs – a detailed inventory and professional appraisal of all assets, including buildings and other real estate holdings
  • The calling and conduct of the various meetings involved in the liquidation process
  • Disburse payments to creditors as funds become available
  • File a statutory report to the Office of the Director of Corporate Enforcement (ODCE) within six months of appointment
  • Deal with all company aspects relating to the banks, the Revenue Commissioners, quantification and prioritisation of creditors, employee claims, etc.

Our experienced teams include expertise in different professional fields of endeavors such as:

  • Restructuring and turnaround professionals
  • Corporate Financiers
  • Qualified Accountants
  • IT Specialists
  • Forensic Accountants
  • IT Specialists
  • Special Investigators

 Overview

Corporate Restructuring

Off recent, the emergence of winding-up proceedings was the first remedy taken by many creditors to recover bad debts, without discovering other alternatives which allow creditors to pay back their debts to debtors and as well as making debtors to achieve business recovery. Nevertheless, in Nigeria, there is a growing trend where companies restructure with the objective of avoiding insolvency, as well as escalating operations and increasing their market share.

Some years back, there have been several cases of close shaves with insolvency, but shareholders, creditors or regulators have stepped in and seek for restructuring of these indisposed companies. The most recent case of restructuring to prevent insolvency is that of Guaranty Trust Bank (GT) taken over Fintech, before 2012, GTBank operated a number of non-banking services. It operated GTB Asset Management for capital market services and GT Assurance, its insurance arm. However, a 2010 regulation by the Central Bank of Nigeria (CBN) forced banks to stop operating their non-banking subsidiaries. They either had to divest from non-core lending service or restructure as a holdings company. But GTBank is not restructuring to offer more banking services. Its main aim is to develop fintech products and build out its payments and fintech arms; basically, this is what corporate restructuring is all about.

The primary legislations governing insolvency and restructuring proceeding in Nigeria are: – The Banks and Other Financial Institutions Act (CAP B3, laws of the Federation of Nigeria, 2004), Company and Allied Matters Act (2004) as amended.

With regards to the time frame for a company to restructure, there is no specific point at which a company must restructure, because restructuring is a continuous process and could occur in moments of solvency. In the case of insolvency proceedings, it may be initiated once a company, after being served with demand notice, fails or is unable to pay any debt in excess of N2, 000. This is a provision as contain in Section 408, CAMA and upheld in the recent Supreme Court decision of Unifam. Ind. Ltd.v. Ecobank (Nig.) Ltd. [2019] 1 NWLR (Pt. 1653) SC 187.

Insolvency Alternatives

These insolvencies have ranged from those that had substantial foreign components to those that were entirely local, and have included both acrimoniously-contested proceedings and amicable resolutions

In Nigeria, an incorporated entity can only be referred to as insolvent company, only after a court has declare it to be. As such, there are several pending cases bordering on issues of insolvency, and more cases are constantly being established regarding liquidation across various industries. The large volume of cases is due to the provision of law that state that a company must be compulsorily wound up, if they are unable to their financial obligations. It should be noted that  it’s only a creditor has standing to petition the court to wind up a company and as per the wording of section 409(a) of CAMA, where a petition is based on a disputed debt, the petitioner is not a ‘creditor’.

Bulls Capital Limited have experience in the management of insolvent debtors, receiverships and liquidations (which can be, either by the court or “under the supervision of the court”), and in dealing with the claims of preferred and secured creditors.

Our company has helped so many companies within Nigeria and foreign companies in corporate restructuring as well as during insolvency. We are also in the business of advising the Asset Management Corporation of Nigeria, where we discover companies that are insolvent and report such to AMCON, so they can know how to handle the company for the debt they owe AMCON.

Key Issues a Company Should Consider When Facing Financial Difficulties

Restructuring Alternatives

In a situation where a company is no longer able to continue with the business and the company’s needs to be shut down. Therefore, it is pertinent to properly deal with this to avert director’s personal liability. Where the company is insolvent, which is inability to meet its liabilities as they fall due or where its debt are greater than the realizable value of its assets, a creditors’ voluntary liquidation may be the most suitable process.

When a company is facing difficulties, they can as well opt for corporate restructuring, this is the action taken by the corporate entity to modify its capital structure or its operations significantly. In doing this there will always be need for the entity to employ the services of a professional.

For example in the case of GTBank mentioned above, they are not really having financial difficulties but there is a law that force them to opting for restructuring in relation to Fintech.  The restructuring procedures can never be embarked upon without carrying along the stakeholders of the company.  Restructuring normally involves, merging or acquisition. Merging companies must hold separate meetings and obtain a yes vote of persons who own at least ¾ of the total value of shares in the companies. Sections 129 and 130, ISA makes an ample provision by which a transferee company may acquire shares of dissenting shareholders, and the right of dissention shareholders to compel to acquisition of their shares, respectively.

This takeover bid must be served on the SEC, the board of directors of the companies, the shareholders and the creditors of the target company.

Diagrammatic Representation of a Restructuring Process

Insolvency Alternatives

Two broad types of winding up proceedings in Nigeria are: Compulsory winding up and voluntary winding up

The ground for winding up by the court are:-

  • The inability of a company to pay its debt
  • Shortfall in membership of the company below two adults
  • Where a court considers winding up as just and equitable etc.

 In the process of winding up there a lot of substantial interfaces that take place.  And Bulls Capital Limited has been functioning as a liquidator in the process of winding up.  In the case of a member’ voluntary winding up, the Directors, the General meeting, a liquidator, an auditor and CAC are involved at different stages. And here, the directors hand over to the liquidator immediately once he is appointed.

The steps to take in liquidating a company are:-

Below is the winding up process in Nigeria (Voluntary and Creditors)

 PROCEDURE FOR A COMPANY VOLUNTARY WINDING-UP BY MEMBERS

  1. The company at a general meeting would pass a special resolution proposing to wind up the company, and at this meeting would appoint one or more liquidators for the process.         The appointed liquidator may be a corporate lawyer or professional such as an accountant with the good knowledge of the winding up laws and procedures.
  2. The company shall give notice of the special resolution passed to the Corporate Affairs Commission (CAC) within 14 days of its passage and also advertise it in the official      gazette or in two daily newspapers. Section 458 (2)
  3. A statutory Declaration of solvency must be made by the directors or majority of the directors within 5 weeks immediately preceding the date of the passing of the special resolution for winding up the company. Section 462 (1),(2)(a)
  4. The company must thereafter cease to carry out business after the resolution for winding up has been passed, and the powers of the directors’ ceased upon the appointment of the          liquidator unless the company in a general meeting or the liquidator allows the     continuance of it. Section 464(2)
  5. In the event the winding up process last for more than a year, the liquidator is to hold a meeting at the end of each year, and these meetings should be called to notice by        publishing it in the official gazette and in some newspapers printed in Nigeria.
  6. The liquidator is to hold final meetings upon liquidation of the company and a copy of the accounts/returns of the meeting sent to the Corporate Affairs Commission within   7days of the meetings for registration. Section 468 (3)
  7. As soon as the affairs of the company are fully wound-up the liquidator is to prepare, send and convene a meeting for the purpose of laying before it the financial accounts of       the winding up, thus showing how the winding up was conducted and result of any        trading during this period. Section 470 (3)
  8. The liquidator is required to preserve all books/papers/documentation of the company on his activities as a liquidator for a period of 5 years before any destruction or otherwise   directed by the commission in such event shall not destroy same until the CAC consents            in writing. Section 470(8)
  9. The liquidator shall within 28 days after this meeting sends to the Corporate Affairs Commission the copies of the accounts and a statement of holding of meeting and dates        for registration. Section 470 (4)
  10. The liquidator is thereafter to finally apply for dissolution order and send same to the It should be noted that the company is deemed dissolve
  11. after 3 months of the registration of the accounts/returns with the Corporate Affairs Commission in accordance with the Sections 478(4)

PROCEDURE FOR VOLUNTARY WINDING UP BY CREDITORS OF COMPANY

Both the Company and its Creditors would hold separate meetings to propose for a winding up of the company. In this case, the company must call the meeting of the creditors on the same day or the next day after. Section 472(1)

The Creditors and the Company at their respective meetings may nominate a person to be the liquidator of the winding up process. However, the person nominated by the Creditors will be the liquidator if different persons were nominated at the two meetings. Meanwhile, any director, member, or creditor may apply to the court to order otherwise. Section 473(1)

The Creditors at their meeting may, if they think fit, appoint a committee of inspection of not more than 5 persons. The Company may also appoint not more than 5 persons to the committee but the creditor may reject such persons so appointed by the Company.

The liquidator shall within 14 days of his appointment publish it in the official gazette and 2 daily newspapers and he is to deliver same to the commission for registration a Notice of his appointment. Section 477

The liquidator shall make publications of notice of the final meeting and the account of the liquidation is laid before and approved by the meeting. And after this meeting, the liquidator must within 7 days sends a copy of the account and return holding of the meeting to the Corporate Affairs Commission.

The company is subsequently deemed dissolved after 3 months of the registration of the accounts and return to the commission, Section 478(4). However, the Court upon an application by the liquidator, member, or creditor can defer the date, which the dissolution is to take effect.

To know more about our services, you can as well visit www.bullscapitalltd.com,

Tax risks in relation to corporate restructuring or Insolvency procedures in Nigeria

In most cases, restructuring or insolvency does not usually draw the risk of direct taxation. Indirect taxes or incidental taxes might, nevertheless, come in the ground of stamp duties; value-added taxes on professional services that was retained, withholding tax on dividends offset or tax on gains on capital asset disposal.

You should note that, employing the service of a Professional will help in process of corporate restructuring and insolvency; that’s why Bulls Capital Limited can be trusted with the rendering of this services.

Moreover, SEC has the power to authorize and regulate restructuring and insolvency securities transactions, and may to this extent, have control over cross-border insolvency proceedings involving securities companies.

There are no specific provision of the CAMA that deals with the restructuring or liquidation of a group of companies. Although, if individual companies are in such a situation, they may appoint the same insolvency officers (That’s a professional, which is what we are versatile with in Bulls Capital Limited) so as to save cost and avoid multiplicity of actions. There are also provisions for audits and investigations to extend to subsidiaries of groups of companies or a holding company. It also requires the directors of a group of companies to also prepare group financial statements annually.

Recently our company has carrying out restructuring services for so many company and as well help organizations facing insolvency in ensuring that they scale through this financial difficulties by applying our experience and professional experiences.

Finally, you have to know that, recently, the CAMA (Amendment) Bill has been passed by both Houses of the National Assembly, which is awaiting presidential assent. Inside this amendment, some notable changes in the new bill include:-

  • The registration of a one-man company
  • Increase in the minimum share capital of companies
  • Pre-action notice and a restriction on the levy of execution etc

Moreover, experts has been brainstorming on the need for insolvency proceedings to be settled out of court, thereby exploring the Alternatives dispute resolution (ADR) schemes. This will tends towards ensuring that companies been able to settle their debts at an agreed periodic intervals and this will minimize the risk of companies being liquidated.

Finally, it is noteworthy that the moment a company voluntarily decides to wind itself up, there are effects and consequences of such action being carried out towards the structure of the company. In this case, the company will cease to carry on its business except so far as may be required for the beneficial winding up of the company. It should be noted that the company still remains a corporate entity with its corporate powers (unless its articles provide otherwise) or until it is finally dissolved.

Though any transfer of shares without the sanction of the liquidator, and any alteration on the status of members of the company made after the commencement of a voluntary winding up shall be void, as provided under the Section 461 of the Company and Allied Matters Act.

To know more about how we can help with this service, please call 08023200801, 08075765799, email: sales@bullscapitalltd.com. Alternatively, you may complete our request for proposal form hereunder.