BLESSING OMALE, Abuja
The Supreme Court of Nigeria on Friday overturned a decision of the Court of Appeal that had disqualified prominent senior advocates, Wole Olanipekun and Muiz Banire, from representing Neconde Energy Limited and Nestoil Limited in an ongoing dispute over 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, despite the appointment of a receiver by a consortium of lenders.
The ruling marks a legal clarification on the limits of a receiver’s powers, particularly in cases where the legitimacy of such an appointment is being contested in court.
At the heart of the case was whether a receiver appointed by lenders could exclusively determine the legal representation of a company, even when the validity of the receivership itself is under judicial challenge.
The Supreme Court answered in the negative, holding that a receiver lacks the authority to impose legal representation on a company in proceedings that question the very basis of the receiver’s appointment.
Justice Idris stated that allowing such control would be fundamentally improper.
According to him, where the foundation of a receiver’s appointment is being challenged, the receiver cannot assume authority over the company’s legal defence in the same proceedings.
The court further warned that permitting a receiver, appointed by lenders whose rights are being disputed, to dictate the company’s legal representation would create an inherent conflict of interest.
It held that such a situation would undermine the fairness of judicial proceedings, as the receiver’s authority is tied to parties whose actions are under scrutiny.
The apex court also clarified that disputes challenging the validity and scope of a receivership fall outside the routine administrative powers granted to receivers under Section 556(3) of the Companies and Allied Matters Act.
In its decision, the court emphasised that companies retain residual authority to defend themselves through their boards of directors and counsel of their choosing in such circumstances.
It ruled that the defence mounted by company-appointed lawyers cannot be deemed invalid simply because a receiver has been appointed.
The judgment effectively restores Olanipekun as counsel for Neconde Energy Limited and Banire for Nestoil Limited in the high-stakes dispute involving an alleged $2 billion debt owed to a consortium of lenders led by FBNQuest Merchant Bank Limited and FBN Trustees Limited.
The Supreme Court also set aside the January 13, 2026 ruling of the Court of Appeal, which had recognised the receiver as the sole authority to appoint legal representation and consequently disqualified the senior advocates and their teams.
It held that the lower court failed to properly consider the conflict inherent in allowing a disputed receiver to control the defence of the companies.
The appeal, marked SC/CV/48/2026, stems from an alleged $2 billion indebtedness by Neconde Energy Limited and Nestoil Limited to a lender consortium.
Following an alleged default, the lenders appointed a receiver/manager to take control of the companies’ assets and operations.
However, the companies challenged the validity of that appointment, triggering a legal battle over both the receivership and the authority to determine legal representation.
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