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Corporate Rescue �and the �Models of Receivership

Dr Bolanle Adebola

Associate Professor of Law, University of Reading

Convener, Commercial Law Research Network Nigeria (CLRNN)

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Administration v Administrative Receivership

Q.1

Can administrative receivership be modified to deliver effectively as a rescue mechanism?

Q.2

Does administration offer a superior rescue mechanism to models of administrative receivership?

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Overview

The Concentrated Creditor and the Traditional Model of Receivership

(Alternative) Models of Receivership

Q.1 Revisited

Q.2 Revisited

Concluding Thoughts

Erin-Ijesha (Olumirin) Waterfalls, Osun State, Nigeria.

Photo: RefinedNG

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The Concentrated Creditor and the Traditional Model of Receivership

Who makes the rescue decision?

When is that decision made?

Decision-making Mechanism

Concentrated Creditor

Challenges

Collectiveness as Inclusion

Value Maximisation

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Alternative Models of Receivership

Ghana:

CA 2019, s.268 (2):

"A receiver or manager who is appointed manager for the whole or a part of the undertaking of a company is, for the purposes of this Act, an officer of that company and stands in a fiduciary relationship to the company, and section 190 shall apply to the manager as if the manager were a director of the company.“

CA 2019, s.263(2) :

"In the exercise of the powers conferred under subsection (1), and section 266, the receiver or manager in the case of a receiver or manager appointed out of Court may give special, but not exclusive, consideration to the interests of those on whose behalf the appointment is made."

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Alternative Models of Receivership

Nigeria

CAMA 2020, s.553(2): "Such a manager—

shall act at all times in what he believes to be the best interests of the company as a whole so as to preserve its assets, further its business, and promote the purposes for which it was formed, and in such manner as a faithful, diligent, careful and ordinarily skillful (sic) manager would act in the circumstances; and
in considering whether a particular transaction or course of action is in the best interest of the company as a whole, may have regard to the interests of the employees, as well as the members of the company, and, when appointed by, or as a representative of, a special class of members or creditors may give special, but not exclusive, consideration to the interests of that class.“

Union Bank of Nigeria Ltd v Tropic Foods Ltd [1992] 3 NWLR (Pt 228) 231 CA .
West African Breweries v Savannah Ventures Ltd (2002) 10 NWLR (Pt 775) 401 SC.

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Models of Receivership

Uganda

Nigeria

Ghana

Exclusive Model

Non-Exclusive Model

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Q.1 Revisited: Towards an Alternative Model of Receivership?

The Non-Exclusive Model on:

Value Maximization

Standing to challenge value destruction

Collectiveness as Inclusion

Due consideration for other interests.

Note:

Modifications for effectiveness

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Q.2 Revisited: Rescue, Administration and the Models of Receivership

Frisby/Armour v. Mokal (Take I):

Goals of Rescue:

From Business Rescue
To Company Rescue

Frisby/Armour v. Mokal (Take II):

Reorienting Rescue:

From Enforcement oriented-rescue models
To Governance oriented-rescue models

Administration as a Governance oriented-rescue mechanism.

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Concluding Thoughts

The notion that a rescue regime can carry on legitimately without … inclusion … either through the traditional receivership or through a disenfranchising prepack is misplaced.

It appears that the answer is to err on the side of inclusion for the sake of legitimacy.

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Thank you!�

Questions/Comments are most welcome:

🖂 b.adebola@reading.ac.uk

@Blanle_A