When a Nigerian company descends into distress, the instinctive response of lawyers, bankers, and financial advisers is to focus on the balance sheet, to renegotiate debt, restructure credit facilities, and manage the competing claims of secured and unsecured creditors. These interventions are undoubtedly necessary. They are however, not sufficient. In the overwhelming majority of Nigerian corporate failures encountered by this writer in the course of acting as a court-appointed administrator, the narrative behind the numbers is strikingly the same: a board that did not function effectively, management that operated without supervision, internal controls that were paid lip service, and decisions of enormous commercial consequence that were taken by individuals accountable to no one.
Corporate governance failure, not sudden commodity price shocks, unfavourable exchange rate movements, or even predatory competition, is the primary underlying cause of corporate distress in Nigeria. Financial difficulties are the symptom while governance deficit is the disease. Yet, insolvency and restructuring practice in Nigeria has, for the most part, continued to treat the symptom while leaving the disease entirely unaddressed.
This article argues for a fundamental shift in the practice of corporate administration in Nigeria. It contends that the court-appointed administrator, armed with transformative powers conferred under the Companies and Allied Matters Act 2020 (‘CAMA 2020’), is uniquely positioned not merely to stabilise a distressed company’s finances but to rebuild the institutional architecture and governance framework, that must underpin any lasting recovery. A company whose debts have been restructured but whose governance framework remains flawed, has not truly been rescued; it has been set up for a second fall.