Conflated Arrangements: A Comment on the Company Voluntary Arrangements in the Proposed Nigerian Insolvency Act 2014

Abstract

The paper examines the effectiveness of the Company Voluntary Arrangements procedure (‘CVA’) in the proposed Nigerian Insolvency Act, 2014. Like in Insolvency Act 1986 of England and Wales, from which it has been transplanted, the CVA procedure provides a parallel procedure to the complex Arrangements and Compromise procedure in the Companies and Allied Matters Act, 2004. The first hurdle is the dearth of information on the challenges of the extant arrangements and compromise procedure, and the absence of the terms of reference on which the proposed reforms have been drafted. Nonetheless, relying on data culled from empirical studies, case law and practitioners’ proposals, three problems are identified for discussion: the absence of a moratorium which exacerbates the complexity of the Nigerian High Court system and undermines the process; lack of clarity; and a pervasive mistrust of arrangements proposed by insolvent companies. Unfortunately, the proposed CVA procedure does little to alleviate these problems. It elides arrangements and compromise with the CVA procedure. It also fails to propose an effective moratorium regime.

Keywords: Corporate Rescue; Company Voluntary Arrangements; Nigeria Corporate Insolvency Law; Arrangements and Compromise; Nigeria Insolvency Law reform