KEY POINTS
- Appeal Court restrains Nestoil and Neconde from obstructing a court-appointed receiver amid a $1.01 billion debt claim.
- Lenders allege attempts to dissipate assets and warn enforcement could be compromised without urgent protection.
- The case is one of Nigeria’s largest corporate debt disputes, with liabilities exceeding N1 trillion in combined naira and dollar terms.
The Court of Appeal in Lagos has stepped in to preserve the authority of a court-appointed receiver overseeing the assets of Nestoil Limited and its affiliate Neconde Energy, issuing an interim order that bars the companies and their promoters from taking any action that might obstruct an ongoing debt recovery process.
The temporary order, delivered by Justice Yargabta Nimpa and contained in a certified copy dated 27 November, followed concerns raised by FBNQuest Merchant Bank and First Trustees Limited over what they described as attempts to reverse a previous freezing order tied to an alleged $1.01 billion debt. The ruling is the latest twist in a fast-moving dispute involving one of the country’s largest corporate debt claims.
At the heart of the matter is the fear by the lenders that Nestoil and its principals might dissipate assets if the receivership is interrupted. The companies are yet to issue a public statement on the development.
Court Order Freezes Status Quo as Lenders Warn of Possible Asset Dissipation
The banks, represented by senior advocates Babajide Okun and Victor Ogude, had applied for an interim injunction to shield the receivership from interference and to suspend proceedings at the Federal High Court until the appeal is heard. Their request stemmed from an earlier ruling on 20 November that lifted a Mareva injunction which had frozen Nestoil’s assets in more than 20 financial institutions.
In their filing, the lenders claimed Nestoil owes a syndicate of local and international banks, including Access Bank, Zenith Bank, Ecobank, Afreximbank, FirstBank, FCMB, UBA and Union Bank, over $1.01 billion and roughly N430 billion as at 30 September, with interest continuing to accrue.
A First Trustees official, Babatunde Adewolu, alleged that the companies’ founder, Ernest Azudialu-Obiejesi, alongside Nnenna Obiejesi, used a network of shell entities to conceal assets, warning that the lenders’ ability to recover funds could be irreparably harmed.
Justice Nimpa granted all the orders sought by the appellants, directing that the receivership manager, Abubakar Sulu-Gambari, be allowed to carry out his duties pending the hearing of the motion on notice, now fixed for 4 December. The court also ordered that the ruling and accompanying processes be served on the respondents without delay.
The conflict has its roots in the original Mareva injunction issued on 22 October by Justice Deinde Dipeolu, which placed Nestoil’s properties and accounts under a wide-ranging freeze.
That order authorised security agencies to assist the receiver in taking possession, leading to the sealing of the company’s headquarters in Victoria Island with armed police presence. The proceedings were later reassigned after Nestoil petitioned the Chief Justice alleging bias.
While the companies have maintained they do not owe the sums claimed and are seeking to vacate the receivership order, the case has broadened into a significant test of how aggressively Nigerian banks can move against large corporate borrowers in distress.
The financial stakes are substantial. With liabilities exceeding N1 trillion when converted into naira, the outcome of the appeal could influence how lenders pursue enforcement in future disputes involving complex corporate structures and cross-linked obligations.
For now, the Court of Appeal’s intervention has restored a temporary calm, keeping the receiver in place while both sides prepare for what is expected to be a closely watched legal battle.
