Legal Twist: Supreme Court Clears Olanipekun, Banire To Return in $2bn Dispute

In a unanimous ruling delivered by Justice Mohammed Baba Idris, the apex court upheld the right of the companies to choose their own legal representatives in a dispute challenging the legality of a receivership arrangement.

The court ruled that when the validity of a receiver’s appointment is being contested, such a receiver cannot assume the authority to appoint legal counsel for the company involved in the same case.

At the heart of the matter was whether lenders who appointed a receiver could exclusively decide who represents the company legally, even while the legitimacy of that appointment is under judicial review. The Supreme Court rejected this position.

Justice Idris explained that the issues before the trial court focused on whether the lenders were entitled to enforce their security, appoint a receiver, and whether the receiver could lawfully exercise such powers—questions that go to the core of the receivership itself.

The court held that allowing a receiver, whose appointment is being challenged, to determine the company’s legal representation would create a clear conflict of interest.

It further noted that a receiver’s powers originate from the same transaction under dispute, making it inappropriate for such a receiver to control the company’s legal defence.

The apex court also clarified that disputes over the validity and scope of a receivership fall outside the general powers granted to receivers under the Companies and Allied Matters Act. As such, companies retain the right to defend themselves through their directors and independently chosen lawyers.

The court set aside the January 13, 2026 judgment of the Court of Appeal, describing it as flawed for failing to recognise the inherent conflict in the arrangement.

The case, which centres on an alleged $2 billion debt owed by Neconde Energy Limited and Nestoil Limited to a group of lenders led by FBNQuest Merchant Bank Limited and FBN Trustees Limited, arose after the lenders appointed a Receiver/Manager following an alleged default.

With this ruling, the Supreme Court has clarified that companies can maintain independent legal representation when challenging receivership arrangements, a decision expected to influence future corporate and insolvency cases.