Supreme Court Restores Olanipekun, Banire As Counsel In $2 Billion Debt Dispute

The Supreme Court on Friday set aside the judgment of the Court of Appeal which disqualified Wole Olanipekun (SAN) and Muiz Banire (SAN) from representing Neconde Energy Limited and Nestoil Limited, respectively, in an ongoing $2bn debt dispute.

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In a unanimous judgment delivered by Mohammed Baba Idris, the apex court affirmed the rights of the companies to appoint their own legal representatives in a case challenging the validity of a receivership.

The court held that where the legality of a receiver’s appointment is being contested, such a receiver cannot assume authority to appoint counsel for the company in the same proceedings.

Naija News reports that at the centre of the dispute was whether a receiver appointed by lenders could exclusively determine the legal representation of a company, even when the legitimacy of that appointment is under judicial scrutiny.

The Supreme Court answered in the negative.

Justice Idris, in the lead judgment, noted that the issues submitted before the trial court revolved around whether the lenders had the right to enforce security, appoint a receiver, and whether the receiver could lawfully exercise powers under such appointment.

According to him, these questions strike at the “very foundation” of the receivership.

“It would occasion a conflict of interest,” the court held, “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 apex court emphasised that the receiver’s authority is derived from the very transaction being challenged, making it inappropriate for such a receiver to control the company’s legal defence.

It further ruled that disputes challenging the validity and scope of a receivership do not fall within the general powers granted to a receiver under Section 556(3) of the Companies and Allied Matters Act.

In such circumstances, the court held that companies cannot be stripped of their residual powers to defend themselves through their boards and chosen counsel.

“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 declared.

The Supreme Court specifically set aside the January 13, 2026 judgment of the Court of Appeal, which had disqualified Olanipekun, Banire, and their legal teams, while recognising the receiver as the sole authority to appoint counsel.

The apex court described the decision as erroneous, noting that the lower court failed to recognise the inherent conflict in allowing a receiver, whose appointment is under challenge, to determine the company’s legal representation.

The case, marked SC/CV/48/2026, stems from an alleged $2bn indebtedness owed by Neconde Energy Limited and Nestoil Limited to a consortium of lenders led by FBNQuest Merchant Bank Limited and FBN Trustees Limited.

Following the alleged default, the lenders appointed a Receiver/Manager to take over the companies’ assets and operations.

By affirming that companies can retain independent legal representation in disputes challenging receivership arrangements, the Supreme Court has clarified a critical aspect of corporate governance and creditor enforcement.

Legal experts say the ruling is expected to shape future insolvency proceedings, particularly in cases where the legitimacy of receivership appointments is contested.