BANKRUPTCY ACT
Act · Finance
An Act governs personal insolvency by allowing individuals unable to pay debts to be declared bankrupt. It targets insolvent persons, creditors, and the courts. This ensures fair distribution of assets and gives debtors a fresh start.
BANKRUPTCY ACT
What Is This Policy?
The principal legislation governing personal insolvency in Nigeria, providing the legal basis for individuals who cannot pay their debts to be adjudged bankrupt and for their assets to be distributed among creditors.
Who Does It Target?
Insolvent individuals unable to pay debts Creditors seeking to recover debts through bankruptcy proceedings Official Receiver and trustees in bankruptcy Federal High Court handling bankruptcy cases
What Does It Aim to Achieve?
Provide a fair, orderly process for distributing a bankrupt's assets among creditors, give honest debtors a fresh start through eventual discharge, and protect creditors from dissipation of assets.
Key Features
Acts of Bankruptcy: Defines the acts (e.g., fraudulent conveyance, non-payment after judgment) that trigger bankruptcy proceedings. Receiving Order: Court makes a receiving order vesting the bankrupt's estate in the Official Receiver. Adjudication: The debtor is adjudicated bankrupt, triggering the formal bankruptcy process. Discharge: A bankrupt may be discharged after satisfying prescribed conditions, releasing them from provable bankruptcy debts.
Current Status
Rollout Stage: Active Coverage: Individual insolvency proceedings nationwide Beneficiaries: Creditors through orderly process; honest debtors through discharge Funding: Court fees; estate assets
How to Access
Petition for bankruptcy filed at Federal High Court Creditors must be owed a minimum statutory amount Debtors may voluntarily petition if unable to pay debts Application method: File bankruptcy petitions at Federal High Court Registry.
Important Terms
An undischarged bankrupt cannot be a company director or hold public office Concealing assets from the trustee is a criminal offence Discharge does not cover all debts — e.g., maintenance orders survive bankruptcy
Official Resources
Website: https://www.justice.gov.ng Contact: Federal High Court / Official Receiver
Legal Framework
Enacted under the legislative powers of the National Assembly as the Bankruptcy Act (Cap B2 LFN 2004), the principal personal insolvency statute. Operates alongside the Companies and Allied Matters Act (CAMA) 2020 on corporate insolvency, the Federal High Court Act on jurisdiction, and the Money Judgments (Enforcement) Act. Aligns with UNCITRAL Model Law on Cross-Border Insolvency and World Bank Principles for Effective Creditor Rights Systems.