- Supreme Court Reverses Appeal Court, Restores SANs in $2bn Dispute
- Court says receiver cannot appoint counsel when appointment is challenged
- Judgment strengthens companies’ rights in receivership disputes
The Supreme Court of Nigeria has set aside a judgment of the Court of Appeal which disqualified Wole Olanipekun and Muiz Banire from representing Neconde Energy Limited and Nestoil Limited in an ongoing $2 billion debt dispute.
In a unanimous judgment delivered by Justice Mohammed Baba Idris, the apex court affirmed the right of the companies to appoint their own legal representatives in a case challenging the validity of a receivership.
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EKO HOT BLOG reports that the court held that where the legality of a receiver’s appointment is being contested, such a receiver cannot assume authority to appoint counsel for the company in the same proceedings.
At the centre of the dispute was whether a receiver appointed by lenders could exclusively determine the legal representation of a company, even when the legitimacy of that appointment is under judicial review. The Supreme Court answered in the negative.
Justice Idris, in the lead judgment, stated that the issues before the trial court included whether the lenders had the right to enforce security, appoint a receiver, and whether the receiver could lawfully exercise powers under that appointment.
According to him, these issues strike at the “very foundation” of the receivership.
“It would occasion a conflict of interest,” the court held, “for a receiver appointed by parties whose rights are being challenged to also determine the legal representation of the company in the same proceedings.”
The court emphasised that the receiver’s authority is derived from the transaction under dispute, making it inappropriate for such a receiver to control the company’s legal defence.
It further ruled that disputes challenging the validity and scope of a receivership do not fall within the general powers granted to a receiver under Section 556(3) of the Companies and Allied Matters Act.
In such circumstances, the court held that companies retain their residual powers to defend themselves through their boards and chosen counsel.
“The defence of the action through its directors and the counsel retained by them cannot be said to be incompetent merely because a receiver has been appointed,” Justice Idris declared.
The apex court consequently set aside the January 13, 2026 judgment of the Court of Appeal, which had disqualified Olanipekun, Banire, and their legal teams, while recognising the receiver as the sole authority to appoint counsel.
The Supreme Court described the appellate court’s decision as erroneous, noting that it failed to address the inherent conflict in allowing a receiver whose appointment is under challenge to determine the company’s legal representation.
The case, marked SC/CV/48/2026, arises from an alleged $2 billion debt owed by Neconde Energy Limited and Nestoil Limited to a consortium of lenders led by FBNQuest Merchant Bank Limited and FBN Trustees Limited.
Following the alleged default, the lenders had appointed a Receiver/Manager to take over the companies’ assets and operations.
By affirming that companies can retain independent legal representation in disputes challenging receivership arrangements, the Supreme Court has clarified a key aspect of corporate governance and creditor enforcement.
Legal analysts say the ruling is expected to influence future insolvency proceedings, particularly in cases where the legitimacy of receivership appointments is contested.
