NDIC: How Liquidation-Related ‎Litigation Frustrate Efforts to Wind up Failed Banks ‎

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ABUJA (Sundiata Post) – The Managing Director of the Nigeria Deposit Insurance Corporation (NDIC), Alhaji Umaru Ibrahim, has lamented how  the menace of liquidation-related litigations  ‎frustrated the corporation’s effort to completely wind up failed banks in accordance with the law and settle depositors and other creditors within a reasonable time limit.
Ibrahim made the disclosure on Monday in Abuja at the 2015 Nigeria Deposit Insurance Corporation (NDIC) annual sensitisation seminar for judicial officers for FCT and States High Court Judges with the theme: ‘Challenges of Deposit Insurance Law and Practice in Nigeria.‎’
According to him, without an appropriate financial safety net, rumours of problems regarding solvency or liquidity of a financial institution have the potential of turning into full-blown crisis.
Ibrahim noted that depositors’ confidence would be greater and the likelihood of financial crisis reduced to barest minimum if an appropriate financial safety net is put in place.
He said: “The menace of liquidation-related litigations made it difficult for the Corporation to completely wind up failed banks in accordance with the law and settle depositors and other creditors within a reasonable time. This is further compounded by the complex and often slow pace of litigations in our esteem courts.”
Lamenting further, the NDIC boss stressed that lack of proper understanding of the legal status and the role of the NDIC by legal practitioners, the court and the public at large as liquidator being a distinct from its role as Deposit Insurer.‎
Ibrahim, however, expressed optimism that the presence of the participants at the seminar assured that the corporation could count on them as committed partners in the pursuit of the NDIC vision of becoming one of the  leading ‎insurers in the world.
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Declaring the seminar open, the Chief Justice of Nigeria (CJN), Justice Mahmud‎ Muhammed, said a proper understanding of the concept and operations of bridge banks, as well as execution of assets of failed banks would enable a better and informed appreciation of the legal issues arising therefrom, or connecting thereto.
Muhammed who was represented by Justice Mutakar Kumasi, stated that the seminar was intended to keep the participants informed of the critical role played by the NDIC in the discharge of its statutory mandate ‎and the expected role of the judiciary in this regard.
“In the discharge of its mandate, especially as pertains ‎to the resolution of banking distresses, in particular, liquidation of failed banks, some of the arcane legal issues bothering on the competing right of creditors, shareholders and depositors of such failed institutions come before your courts,” he said.

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