$2bn Debt Dispute: S’Court Voids A’Court Ruling, Restores Olanipekun, Banire As Counsel
The Supreme Court of Nigeria on Friday set aside the decision of the Court of Appeal, which had disqualified Chief Wole Olanipekun (SAN) and Dr Muiz Banire (SAN) from appearing as counsel for Neconde Energy Limited and Nestoil Limited, respectively, in a dispute challenging the validity of a receivership.
In a unanimous judgment delivered by Justice Mohammed Idris, the apex court affirmed the right of the companies to retain counsel of their choice, notwithstanding the appointment of a receiver by a consortium of lenders.
The court held that where the legality of a receiver’s appointment is itself the subject of judicial contest, such a receiver lacks the authority to appoint counsel to represent the company in the same proceedings.
Justice Idris held, “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.”
The ruling effectively restores the appearance of Olanipekun for Neconde Energy Limited and Banire for Nestoil Limited in the dispute involving an alleged $2bn indebtedness to a consortium of lenders led by FBNQuest Merchant Bank Limited and FBN Trustees Limited.
The issue before the court was whether a receiver appointed by lenders could exclusively determine the legal representation of a company, even where the validity of that appointment is being challenged.
The apex court resolved the issue in the negative.
The court observed that the questions before the trial court sought interpretation on whether the lenders were entitled to enforce security, appoint a receiver, and whether the receiver could validly exercise powers under such appointment.
“These questions,” Justice Idris noted, “go to the very root and foundation of the receivership and cannot be categorised as matters of routine administration or asset realisation.”
The court further held that allowing a receiver whose authority is derived from a disputed transaction to dictate a company’s legal representation would create a conflict of interest.
“It would occasion a conflict of interest 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 held.
On the scope of the receiver’s powers, the apex 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.
In those circumstances, the court held that the company retains its residual powers to defend the action through its board of directors and counsel of its choosing.
“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 said.
The apex court consequently faulted the January 13, 2026, decision of the Court of Appeal, which had recognised the receiver as the sole authority competent to appoint counsel and disqualified Olanipekun, Banire and their legal teams.
It further held that the lower court’s position was erroneous.
The Supreme Court said the Court of Appeal failed to appreciate the inherent conflict in allowing a receiver, whose appointment is under judicial scrutiny, to control the company’s legal defence.
The appeal marked SC/CV/48/2026 arose from an alleged $2bn indebtedness owed by Nestoil Limited and Neconde Energy Limited to the lender consortium, which had appointed a receiver/manager following an alleged default.
In affirming the right of companies to independent legal representation in disputes challenging receivership arrangements, the Supreme Court underscored a key principle of corporate law.
Justice Idris held: “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.”
