OVERVIEW OF THE INSOLVENCY REGULATIONS, 2022

INTRODUCTION

On 24th April 2022, the Honourable Minister of Industry, Trade, and Investment approved the Insolvency Regulations, 2022(“the Regulations”), pursuant to Section 867 of the Companies and Allied Matters Act, 2020.

The Regulations are aimed at clarifying compliance requirements for insolvency practitioners and providing comprehensive governance and procedural framework for insolvency practice, in line with global regulatory best practices.

The Regulations repeals clause 24 of the Company Regulations 2021 and is inapplicable to the rules of court relating to insolvency applications made by the Chief Judge of the Federal High Court or any court vested with jurisdiction to hear cases arising out of the Companies and Allied Matters Act, 2020.

The article highlights significant provisions of the regulations.

A.???ACCREDITATION OF INSOLVENCY PRACTITIONERS – CHAPTER 3

?Members of certain professional bodies may apply to the Commission for accreditation as insolvency practitioners. Some of the professional bodies include the Nigerian Bar Association, Institute of Chartered Accountants of Nigeria, Association of National Accountants of Nigeria, and Institute of Chartered Secretaries, and Administrators of Nigeria among others.

?Persons found by a competent court to be of unsound mind, an infant, body corporate, director or auditor of the company, and an undischarged bankrupt cannot be appointed or act as insolvency practitioners of any property or undertaking of any company.

?A member will be required to submit a duly completed form CAC-MISC 02, evidence of membership of a relevant professional body, evidence of an appointment, eligibility to practice for the current year, and payment of the prescribed application fee.

?The accreditation of an insolvency practitioner by the Commission shall be renewable every two years and at no cost.

?Accreditation may be withdrawn by the Commission where the holder of the accreditation is disqualified from practice by a professional body or appears at any time to be unfit to act as an insolvency practitioner the Commission.

?B.???COMPANY VOLUNTARY ARRANGEMENTS – CHAPTER 4

?A Nominee/Supervisor may be appointed upon notice of intention to appoint a nominee to supervise the scheme of arrangement and written consent of the nominee to the appointment.

?The Nominee shall within 28 days of the notice of appointment and upon the receipt of a detailed proposal for a composition of the debts of the company or scheme of the arrangement, submit a report to the Court expressing an opinion on whether separate meetings should be summoned to consider the proposal.

?The Proposal shall be considered by a separate meeting of the creditors and the company. In event of a divergence between the proposal, the proposal of the creditors takes precedence over that of the company without prejudice to the right of members to apply to the court for variation.

?The proposal takes effect on approval at both meetings without modification and a return of the meeting shall be filed with the Federal High Court and a copy of the notice of appointment shall be filed with the commission within 14 days.

?A nominee or supervisor of a voluntary arrangement can be replaced with the consent of the creditors and the company.

?A voluntary arrangement ceases upon completion, transition to compulsory liquidation, and breach of the terms of the voluntary arrangement.

?C.??ESTABLISHMENT AND OPERATION OF A CREDITOR’S COMMITTEE IN AN ADMINISTRATION- SCHEDULE 4 PARAGRAPH 5

?The Regulation provides for the establishment and operation of a Creditor’s Committee in an Administration. The Creditor’s Committee is to assist the administrator in discharging the administrator’s functions and oversee the reorganization plan and the powers of the administrator/the committee.

?D.???REPORTING AND REMUNERATION OF ADMINISTRATORS

?The Administrator shall prepare and deliver progress reports to the Commission. This shall contain, among other things, the date of appointment of the administrator, details of progress during the period of the report, including a summary account of receipts and payments during the period of the report, information relating to remuneration and expenses, etc.

????????CONCLUSION

The novel provisions in the Regulations are a commendable and welcome development in the corporate domain. The Regulations sets out specific timelines and details required to execute insolvency activities as contained in the CAMA 2020, which is fitting for contemporary business and insolvency practices.?