“Integrating ADR, Key To Fixing Nigeria’s Broken Insolvency System”
By TINA TOLUTOPE
The Case for ADR
NIGERIA’S insolvency regime has strong statutory foundations but weak procedures that leave businesses and creditors trapped in endless litigation. Justice Onyekachi Otisi of the Court of Appeal underscored that the system’s reliance on already overstretched courts undermines the speed and efficiency corporate rescues demand.
She argued that Alternative Dispute Resolution (ADR) could fill this gap, handling pre-insolvency negotiations and restructuring, while the courts step in only to legitimise, supervise, and enforce outcomes. With clear rules and professional standards, ADR could become the catalyst for a faster, more credible, and investor-friendly insolvency system.
Judicial Role in Insolvency
While ADR offers promise, the judiciary remains pivotal. Justice Alexander Owoeye of the Federal High Court noted that the Companies and Allied Matters Act (CAMA) 2020 introduced new corporate rescue mechanisms — Company Voluntary Arrangements (CVA) and Administration. But these tools will falter if court delays persist.
He urged stronger collaboration between BRIPAN and the judiciary, alongside specialised judicial training in corporate rescue processes. In insolvency, where timing is everything, judges equipped with technical expertise could be the difference between saving or sinking distressed companies.
Cross-Border Lessons
The challenge of insolvency extends beyond Nigeria. Kabiito Karamagi, Managing Partner at Ligomarc Advocates in Uganda, highlighted the pressing need for cross-border cooperation. The absence of coordination in African insolvency cases often fuels mistrust, duplication, and poor recovery outcomes.
Karamagi argued for frameworks that both respect national sovereignty and prevent conflicting judgments. By harmonising insolvency procedures across borders, African economies can better protect creditors, reduce the cost of rescues, and safeguard investor confidence.
Conclusion
Nigeria cannot afford an insolvency framework that is slow, unpredictable, and unattractive to investors. Integrating ADR as a central pillar — while empowering the judiciary with tools and training, and learning from cross-border best practices — is essential.
This is not just a matter of reform; it is a matter of economic survival.
