CO-ORDINATION OF INSOLVENCY PROCEDURES CO-ORDINATION OF INSOLVENCY PROCEDURES BETWEEN NIGERIA AND FOREIGN JURISDICITIONS- BETWEEN NIGERIA AND FOREIGN JURISDICITIONS-

WHAT WORKS & WHAT DOES NOTWHAT WORKS & WHAT DOES NOT

CASE STUDY: CASE STUDY:

Alan Dick and Company West Africa Limited (in liquidation) Alan Dick and Company West Africa Limited (in liquidation) (“ADWA”)(“ADWA”)

Presented by Presented by

Seyi AkinwunmiSeyi Akinwunmi

Partner Partner

Akinwunmi & Busari, LPAkinwunmi & Busari, LP

seyi@akinwunmibusari.comseyi@akinwunmibusari.com

BACKGROUND INFORMATIONBACKGROUND INFORMATION ADWA was incorporated in Nigeria in 22nd February 2001 ADWA was incorporated in Nigeria in 22nd February 2001 as a wholly owned subsidiary of Alan Dick & Company as a wholly owned subsidiary of Alan Dick & Company Limited UK, (“ADC”). Limited UK, (“ADC”).

Sometime in June 2008, ADWA's Directors surreptitiously Sometime in June 2008, ADWA's Directors surreptitiously initiated a members’ voluntary winding-up process on initiated a members’ voluntary winding-up process on behalf of ADWA. behalf of ADWA.

On 17th December 2008, the members’ voluntary winding On 17th December 2008, the members’ voluntary winding up was substituted with a court ordered liquidation on the up was substituted with a court ordered liquidation on the application of Diamond Bank Plc.application of Diamond Bank Plc.

During the course of the liquidation we discovered that During the course of the liquidation we discovered that ADWA’s directors had carried out a considerable number ADWA’s directors had carried out a considerable number of fraudulent transfers of funds from ADWA outside of fraudulent transfers of funds from ADWA outside Nigeria (particularly to the UK).Nigeria (particularly to the UK).

BACKGROUND INFORMATIONBACKGROUND INFORMATION As liquidators we have an obligation to ensure that the As liquidators we have an obligation to ensure that the Directors of ADWA are held accountable for any Directors of ADWA are held accountable for any fraudulent activities and ensure that they contribute to fraudulent activities and ensure that they contribute to offsetting the liabilities of ADWA.offsetting the liabilities of ADWA.

We have therefore engaged the services of the following;We have therefore engaged the services of the following; UK based Solicitors and Queen’s Counsel.UK based Solicitors and Queen’s Counsel.

International Forensic Accountants.International Forensic Accountants.

UK Investigators UK Investigators

This treatise focuses on co-ordination of insolvency This treatise focuses on co-ordination of insolvency procedures between Nigeria and United Kingdom using procedures between Nigeria and United Kingdom using ADWA as a case studyADWA as a case study..

THE FOREIGN JUDGMENTSTHE FOREIGN JUDGMENTS (RECIPROCAL ENFORCEMENT) (RECIPROCAL ENFORCEMENT)

ACT ACT (“THE ACT”)(“THE ACT”)

THE FOREIGN JUDGMENTS (RECIPROCAL ENFORCEMENT) ACT THE FOREIGN JUDGMENTS (RECIPROCAL ENFORCEMENT) ACT (“THE ACT”)(“THE ACT”)

The Act is based on reciprocity of treatment of similar The Act is based on reciprocity of treatment of similar judgments in the originating country.judgments in the originating country.

It provides for the enforcement in Nigeria of final and It provides for the enforcement in Nigeria of final and conclusive judgments and orders delivered by superior conclusive judgments and orders delivered by superior courts of foreign countriescourts of foreign countries . .

The judgments of the courts of foreign countries can be The judgments of the courts of foreign countries can be enforced in Nigeria by the order of the Minister of Justice enforced in Nigeria by the order of the Minister of Justice whose discretion to confer reciprocal status to a foreign whose discretion to confer reciprocal status to a foreign country is based on his being satisfied that, substantial country is based on his being satisfied that, substantial reciprocity of treatment will be assured as regards the reciprocity of treatment will be assured as regards the enforcement in that foreign country of judgments given in enforcement in that foreign country of judgments given in superior courts in Nigeria.superior courts in Nigeria.

THE FOREIGN JUDGMENTS (RECIPROCAL ENFORCEMENT) ACT THE FOREIGN JUDGMENTS (RECIPROCAL ENFORCEMENT) ACT (“THE ACT”)(“THE ACT”)

A creditor in respect of a foreign judgment may apply to a A creditor in respect of a foreign judgment may apply to a superior court in Nigeria anytime within 6 (Six) years after superior court in Nigeria anytime within 6 (Six) years after the date of the judgment. the date of the judgment.

Where there is an appeal during the proceedings, the Where there is an appeal during the proceedings, the creditor may apply after the date of the last judgment creditor may apply after the date of the last judgment given on the appeal.given on the appeal.

The application for registration is by Originating Summons The application for registration is by Originating Summons on notice to the judgment creditor, accompanied with the on notice to the judgment creditor, accompanied with the certified copy of the foreign judgment itself.certified copy of the foreign judgment itself.

Upon its being registered, the judgment, for the purposes Upon its being registered, the judgment, for the purposes of execution, is of the same force and effect, and of execution, is of the same force and effect, and proceedings may be taken on it.proceedings may be taken on it.

THE FOREIGN JUDGMENTS (RECIPROCAL ENFORCEMENT) ACT THE FOREIGN JUDGMENTS (RECIPROCAL ENFORCEMENT) ACT (“THE ACT”)(“THE ACT”)

It is pertinent to note that by virtue of It is pertinent to note that by virtue of Section 8 of the Act, “no proceedings for Section 8 of the Act, “no proceedings for the recovery of a sum payable under a the recovery of a sum payable under a foreign judgment, being a judgment to foreign judgment, being a judgment to which Part 1 of the Act applies, other than which Part 1 of the Act applies, other than proceedings by way of registration of the proceedings by way of registration of the judgment, shall be entertained by any court judgment, shall be entertained by any court in Nigeria”in Nigeria”. .

THE UNCITRAL MODEL LAW ON THE UNCITRAL MODEL LAW ON CROSS-BORDER INSOLVENCY CROSS-BORDER INSOLVENCY

(“THE MODEL LAW”)(“THE MODEL LAW”)

THE UNCITRAL MODEL LAW ON CROSS-BORDER THE UNCITRAL MODEL LAW ON CROSS-BORDER INSOLVENCY (“THE MODEL LAW”)INSOLVENCY (“THE MODEL LAW”)

Adopted by UNCITRAL on 30th May 1997, the Model Law Adopted by UNCITRAL on 30th May 1997, the Model Law is designed to assist States to equip their insolvency laws is designed to assist States to equip their insolvency laws with a modern, harmonized and fair framework to address with a modern, harmonized and fair framework to address more effectively instances of cross-border insolvency. more effectively instances of cross-border insolvency.

The Model Law is unilateral and does not require The Model Law is unilateral and does not require reciprocity from other states so local recognition is reciprocity from other states so local recognition is available for insolvency proceedings anywhere in the available for insolvency proceedings anywhere in the world.world.

But some states like South Africa and Mexico require But some states like South Africa and Mexico require reciprocity while states like the United States, Japan and reciprocity while states like the United States, Japan and the United Kingdom do not require reciprocity for the the United Kingdom do not require reciprocity for the applicability of the Law.applicability of the Law.

The United Kingdom Model The United Kingdom Model LawLaw on Cross-Border on Cross-Border

Insolvency Regulations Insolvency Regulations 20062006

The United Kingdom Model Law version as enacted in The United Kingdom Model Law version as enacted in 2006 by the Cross-Border Insolvency Regulations 2006 by the Cross-Border Insolvency Regulations 2006 will be our focal point in this discourse.2006 will be our focal point in this discourse.

The law is applicable whereThe law is applicable where;;

assistance is sought in Great Britain by a assistance is sought in Great Britain by a foreign court or a foreign representative in foreign court or a foreign representative in connection with a foreign proceeding; orconnection with a foreign proceeding; or

assistance is sought in a foreign state in assistance is sought in a foreign state in connection with a proceeding under British connection with a proceeding under British Insolvency law; orInsolvency law; or

The law is applicable whereThe law is applicable where;;

a foreign proceeding and a proceeding a foreign proceeding and a proceeding under British Insolvency law in respect of the under British Insolvency law in respect of the same debtor are taking place concurrently; same debtor are taking place concurrently; oror

creditors or other interested persons in a creditors or other interested persons in a foreign state have an interest in requesting foreign state have an interest in requesting the commencement of, or participating in, a the commencement of, or participating in, a proceeding under British insolvency law.proceeding under British insolvency law.

The law divides foreign proceedings into;The law divides foreign proceedings into;

MAIN PROCEEDINGS MAIN PROCEEDINGS

ANDAND

NON-MAIN PROCEEDINGSNON-MAIN PROCEEDINGS

ARTICLE ARTICLE 1515

By virtue of Article 15 of the Model Law, a By virtue of Article 15 of the Model Law, a foreign representative may apply to the foreign representative may apply to the court for recognition of the foreign court for recognition of the foreign proceedings in which he has been proceedings in which he has been appointed. appointed.

THE THE GRANTGRANT OF ASSET OF ASSET FREEZING FREEZING

ORDERSORDERS/INJUNCTIONS/INJUNCTIONS

The English courts have the powers to The English courts have the powers to assist victims of fraud through the grant of assist victims of fraud through the grant of asset freezing injunctions and search asset freezing injunctions and search orders. orders.

Section 25 of the Civil Jurisdiction and Section 25 of the Civil Jurisdiction and Judgments Act 1982 empowers the High Judgments Act 1982 empowers the High Court in England to grant interim relief in Court in England to grant interim relief in aid of legal proceedings in other countries.aid of legal proceedings in other countries.

Credit Suisse Fides Trust SA v Cuoghi Credit Suisse Fides Trust SA v Cuoghi

(1997) 3 All ER 724(1997) 3 All ER 724

Lord Justice Millet recognised that an Lord Justice Millet recognised that an ancillary jurisdiction ought to be exercised ancillary jurisdiction ought to be exercised with caution, and care should be taken not with caution, and care should be taken not to make orders which conflict with those of to make orders which conflict with those of the court seized of the substantive the court seized of the substantive proceedings.proceedings.

Credit Corporation v Uzan and ANOR Credit Corporation v Uzan and ANOR

(2003) EWCA Civ 752(2003) EWCA Civ 752 Lord Justice Potter stated the considerations Lord Justice Potter stated the considerations

which the court will bear in mind as follows;which the court will bear in mind as follows;

““Whether the making of the order will interfere Whether the making of the order will interfere with the management of the case in the primary with the management of the case in the primary court;court;

Whether it is the policy in the primary jurisdiction Whether it is the policy in the primary jurisdiction not itself to make worldwide freezing/disclosure not itself to make worldwide freezing/disclosure orders;orders;

Credit Corporation v Uzan and ANOR Credit Corporation v Uzan and ANOR

(2003) EWCA Civ 752(2003) EWCA Civ 752 Whether there is a danger that the orders made will give Whether there is a danger that the orders made will give rise to disharmony or confusion and/or risk of conflicting, rise to disharmony or confusion and/or risk of conflicting, inconsistent or overlapping orders in other jurisdictions, inconsistent or overlapping orders in other jurisdictions, in particular the courts of the state where the person in particular the courts of the state where the person enjoined resides or where the assets affected are enjoined resides or where the assets affected are located. located. Whether at the time the order is sought there is likely to Whether at the time the order is sought there is likely to be a potential conflict as to jurisdiction rendering it be a potential conflict as to jurisdiction rendering it inappropriate and inexpedient to make a worldwide inappropriate and inexpedient to make a worldwide order.order.Whether, in a case where jurisdiction is resisted and Whether, in a case where jurisdiction is resisted and disobedience to be expected the court will be making an disobedience to be expected the court will be making an order which it can not enforceorder which it can not enforce

Taking Taking ADWA’sADWA’s proceedingsproceedings into into

perspectiveperspective

FRAUD!!!FRAUD!!!

Financial department of ADWA was Financial department of ADWA was substantially run from the UK and substantially run from the UK and documents were consciously destroyed.documents were consciously destroyed.

Coincidence in the timing of the movement Coincidence in the timing of the movement of funds from Nigeria to England and the of funds from Nigeria to England and the period in which the English company was period in which the English company was in financial difficultiesin financial difficulties..

FRAUD!!!FRAUD!!!dividend of NGN 1.296 billion for the financial dividend of NGN 1.296 billion for the financial year ended 31 March 2005, was paid at a time year ended 31 March 2005, was paid at a time when ADWA was operating at a loss and had when ADWA was operating at a loss and had negative shareholders’ funds.negative shareholders’ funds.

Loan of over N8 billion from the banks despite Loan of over N8 billion from the banks despite the fact that ADWA was paid in advance for the fact that ADWA was paid in advance for majority of its contracts so that there was no majority of its contracts so that there was no need for the facilities which ADWA obtained need for the facilities which ADWA obtained from the Banks. from the Banks.

Tax Evasion.Tax Evasion.

Options !!!Options !!!

Freezing orderFreezing order

OROR

Recognition of proceedingsRecognition of proceedings

CONCLUSIONCONCLUSION

Clearly, the intricacies and complexities Clearly, the intricacies and complexities involved in this cross-border insolvency involved in this cross-border insolvency proceeding is quite challenging. We are proceeding is quite challenging. We are however assured that considering its however assured that considering its success thus far, the liquidation success thus far, the liquidation proceedings will expand the boundaries of proceedings will expand the boundaries of insolvency proceedings in Nigeria. insolvency proceedings in Nigeria.

THANK THANK

YOU.YOU.