Legal experts in the Nigerian judiciary system have said the Asset Management Corporation of Nigeria (AMCON), can achieve its N5 trillion debt recovery target if it takes advantage of its full powers in the newly amended AMCON Act, which President Mohammadu Buhari signed into law late last year.
Speaking at a seminar for AMCON Receivers/Receiver Managers in General Enforcement, held at the weekend in Abuja, the experts said AMCON can leverage the enormous powers of receivership as well as winding up and bankruptcy proceedings in its Act to hasten the debt recovery, saying they were undisputable and potent tools.
Specifically, Senior Partner, Lexavier Partners, Francis Chuka Agbu, said receivership was the most effective debt recovery tool within the current debt recovery regime, noting that if leveraged to the maximum, will help Nigeria, especially now that the federal government needs a lot of money to bridge the financial gaps heightened by the COVID-19.
Agbu, who was represented by Mohammad Sani Umar, said by virtue of section 393(4) of the Companies and Allied Matters Act (CAMA), upon the appointment of a Receiver and Manager, the powers and control of the directors over the debtor company becomes immediately suspended.
He maintained that even where the Receiver is not empowered to act as Manager, he retains executive control over such portion of the company’s assets, which have been charged.
He said: “Receivership, as a debt recovery strategy, is arguably the most effective debt recovery tool within our current insolvency and debt recovery regime. This is primarily because of the control, which it gives to the debenture holder and creditor over the assets, or the assets and business of the debtor company.”
He argued that pursuant to Section 48(3) of the AMCON Act, the Receiver’s powers to assume control over the assets of the company is not limited to the assets, which have been charged under the Eligible Bank Asset (EBA) but also included unpledged and uncharged assets.
He added that the extraordinary provision bestows a far-reaching advantage on AMCON in the realisation of outstanding EBAs by enabling it to sustain maximum pressure on the debtor company (including its officers and shareholders) and increasing the pool of assets from which they might realise the indebted sum.
Speaking on how AMCON could apply the powers of receivership, Chief Executive Officer, Alheri Legal and Allied Services Consulting and former Board Secretary and Legal Director, Nigeria Deposit Insurance Corporation (NDIC), Alheri B. Nyako, reiterated that the enabling Act further extended the powers of its appointed Receivers beyond the scope of CAMA, and the general principles on receivership.
He said AMCON must activate the winding up and bankruptcy proceeding in its debt recovery drive, noting that Section 52 of the AMCON Act had already provided for winding up a debtor’s company upon a demand notice for a liquidated sum owed.
Earlier in his remarks, the Managing Director and Chief Executive Officer, Ahmed Kuru, said if AMCON fails to recover the huge outstanding debt of over N5 trillion, the debt burden would automatically become the debt of the Federal Government, which taxpayers’ monies would be used to settle in the long run.
He maintained that failure to recover the debt would cause the Nigerian public to pay for the recklessness of the few individuals who have continued to take advantage of the loopholes in the laws to escape their moral and legal obligations to repay their debts.
Kuru, represented by the Group Head, Resolution Strategy, Aliyu Kalgo, urged all AMCON partners especially in the receivership business not to allow a few individuals to escape with the commonwealth of all Nigerians.
However, he cautioned them to ensure that the recovery process is in strict compliance with the confines of the law.
He said: “In order to streamline the functions of our Receivers and make them more effective and accountable, we have developed a new Receivership Framework, which will henceforth govern our relationship in terms of management of the assets and accountability.
“We have had courses to disengage some of our Receiver Managers due to non-performance. We did that because assets are being abandoned without cause or plan to come out of the debt, and at times, Receiver Managers are confused about their responsibilities.”