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Addressing Insolvency and Business Recovery Issues in the Oil Industry: Proposal for Improvement in Nigeria’s Insolvency and Bankruptcy Laws By Olujobi, Olusola Joshua

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Abstract

Background/Aim: Insolvency and business recovery laws in Nigeria have not evolved to incorporated reorganisation, reformation of insolvent oil firms’ operations to boost commercial oil firms’ steadiness and economic suitability like other moderately developed countries. In Nigeria, liquidation is understood by many as the panacea to indebtedness. The research evaluates Nigerian insolvency and business recovery legal regime to sustain indebted oil firms from economic shocks owing to the global decline in the oil price to avert imminent business failures due to insufficient cash flows. The aim is to fill the gaps in Nigeria’s insolvency and business recovery laws by recommending a model for the sustenance of oil firms and to propose the reform of the gaps identified in the existing laws and the extant literature on the subject.

Methods/Materials: The paper opted for conceptual legal review, comparative legal and policies analyses of solvency and business recovery legislations in Nigeria, Malaysia, India, South Africa, the United Kingdom and the United States. These nations were designated for this study because their insolvency and business recovery legal regime are business rescued driven, not winding up centred.The study is library research-based to address some of the flaws in Nigeria’s insolvency and business recovery laws.

Results/Findings: The study finds thatNigerian legislation on insolvency is flawed in the area of oil firms’ salvage, improvement and rearrangement. It ends that, statutory bodies in the designated case study nations are efficient than those in Nigeria due to the strong political will of their governments in supporting insolvent oil firms for successful financial recovery, to safeguard jobs, to protect creditors and to enhance the wealth of their nations through sound business recovery policies and laws.

Conclusions/Recommendations: The study, advocates remodel of Nigeria’s insolvency and business recovery legislations and policies in compliance with the international standards on insolvent oil firms salvaged and creditors focused policies for a robust economy. The study concludes with the recommendation for further study to consider quantitative analysis research methodology to project further scholarship on the subject.

Keywords: Nigeria, Oil Firms, Creditor, Insolvency and Recovery laws.

Introduction

Globally, the call to overhaul insolvency and business recovery laws have been a concern to many nations, as many countries are now making an effort to enhance their insolvency laws to focus on business salvage and lenders focused legal regime to enhance fiscal stability, business propriety and to avert loss of means of livelihoods.

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