Professionalising Business Recovery and Insolvency Practice in Nigeria
By Idowu Sowunmi
In most developed nations, Business Recovery and Insolvency has become a professional job that makes it compulsory for a practitioner to be so licensed or chartered before practising. On the other hand, many Nigerians think they already know all that business recovery and insolvency entails, simply because the very word insolvency to a very large extent connotes failure. However, if the truth must be told the profession goes beyond mere description or tag as currently be viewed by many people who are rather feeding on the system without the basic professional skills.
Insolvency has over the years enjoys a legal status as having insufficient assets to meet all debts or being unable to pay debts as and when due. This can occur at either on a personal or corporate levels. The most relevant aspects of Nigerian statutory book that deals with the insolvency are contained in Sections 387 to 540 and Schedules 11 and 12 of the Companies and Allied Matter Decree (CAMD) of 1990. Nigeria is yet to have the Insolvency Act! Unfortunately, the British law, which is the "parent legal body" for our law, has provisions for Insolvency. The business environment in Nigeria has matured enough to get such Act too.
The determination to actually give the profession its deserved status among other professions has unarguably made some Nigerians developed specialist knowledge and expertise in these areas and formed the Business Recovery and Insolvency Practitioners Association of Nigeria (BRIPAN).
The driven force of the 21st Century of Information Technology is the power of knowledge and information. The absence of adequate knowledge on the practices of insolvency is obviously not a good sign to our economy that is majorly prone to many problems. No doubt, the profession has an interface of both law and accountancy as well as banking and finance. But the cutting-edge of Insolvency practitioners is the standard and professional ways of handling issues, which always significantly differ from all-comers' affairs. Besides, the professionals would be able to devise and establish the best insolvency procedures that are most successful for both creditors and businesses and how best they can be improved. The fact also remains that insolvency could be avoided if professional advice is sought from the experts.
Experience has shown in Nigeria that there are a number of reasons why a company might become insolvent. For examples, management failure to acquire adequate skills, over-optimism in planning, imprudent accounting, lack of management information, loss of long-term finance, lack of working capital etc. but insolvency practitioners are fast resorting to business rescue and turnaround management rather liquidation, which is always the last resort.
The major clamour by government for foreign and local investors should be done in a way to provide for rules and measures to disqualify or prosecute a company which intends to trade when it is insolvent and when there is no real prospect of improvement in its finances. Also, the need for the establishment of Insolvency Act cannot be further debated in Nigeria. BRIPAN has a big role to play in this direction.
The task presented to BRIPAN's members is the legislation of the body as a professional voice, who should mainly serve in such capacities as adminstrative receivers, receivers, administrators, liquidators, trustees in bankruptcy and sequestration, trustees under deeds of arrangement and trustees under trust deeds. This is to separate the wheats from the chaffs.
The courage of the founding members such as Prince Adesupo Adetola, Prince Ade Babington-Ashaye, Chief Kola Bajomo and Mr Seyi Akinwunmi among others should be commended and appreciated for placing the country on roadmap of yet another professional endeavour.
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