The Supreme Court of Nigeria has nullified a decision of the Court of Appeal which had disqualified two Senior Advocates of Nigeria, Chief Wole Olanipekun and Dr Muiz Banire, from representing their respective clients in a high-stakes legal dispute arising from an alleged two billion dollar indebtedness to a consortium of lenders.
In a unanimous judgment delivered on Friday by Justice Mohammed Idris, the apex court affirmed that Neconde Energy Limited and Nestoil Limited retained the right to engage counsel of their own choice in the ongoing proceedings, and that the appointment of a receiver by the lender consortium did not strip the companies of that fundamental right, particularly where the validity of that receivership was itself the subject of the same litigation.
The case, marked SC/CV/48/2026, stemmed from an alleged default by Nestoil Limited and Neconde Energy Limited on a debt of approximately two billion dollars owed to a lender consortium led by FBNQuest Merchant Bank Limited and FBN Trustees Limited. Following the alleged default, the lenders appointed a receiver/manager over the companies, and it was in that capacity that the receiver sought to take control of the companies' legal representation in the proceedings challenging the receivership. The Court of Appeal had on January 13, 2026, sided with the receiver, recognising him as the sole authority competent to appoint counsel and consequently disqualifying Olanipekun, who appeared for Neconde Energy Limited, and Banire, who appeared for Nestoil Limited.
The Supreme Court, however, found that ruling to be fundamentally flawed. Justice Idris held that where the very foundation of a receiver's appointment is under challenge before a court, it would be entirely improper to allow that same receiver to assume control of the company's legal representation in those same proceedings. To permit such an arrangement, the court reasoned, would create a manifest conflict of interest, since the receiver derived his authority from the very transaction whose legality was being contested.
"Where the very foundation of the receiver's appointment is under challenge, it would be improper for such a receiver to assume control of the company's legal representation in that suit," Justice Idris stated in the judgment.
The apex court further held that the proceedings before the trial court, which sought judicial interpretation of whether the lenders were entitled to enforce their security, appoint a receiver and exercise powers under such appointment, went to the very root and foundation of the receivership arrangement and could not be classified as matters of routine administration or asset realisation. In those circumstances, the court ruled that the companies retained their residual powers to defend the action through their boards of directors and counsel of their own choosing.
On the scope of the receiver's authority, the Supreme Court ruled that proceedings challenging the validity and extent of a receivership do not fall within the general powers conferred under Section 556(3) of the Companies and Allied Matters Act and its Eleventh Schedule, further reinforcing its conclusion that the receiver had no basis for dictating the companies' legal representation in those proceedings.
"A company cannot, in circumstances where the validity of a receivership is in issue, be stripped of its residual authority to defend itself through counsel appointed by its directors," Justice Idris declared, in what legal observers say is a significant affirmation of corporate rights and the independence of legal representation in receivership disputes. The ruling effectively restores Olanipekun and Banire, along with their respective legal teams, to full standing in the proceedings before the lower court.
0 Comments