Sanford Mba - Academia.edu (original) (raw)
Papers by Sanford Mba
New Financing for Distressed Businesses in the Context of Business Restructuring Law, 2019
Chapter 4 examined the approaches to incentivizing new financing, which as noted is vital for a s... more Chapter 4 examined the approaches to incentivizing new financing, which as noted is vital for a successful restructuring and consequently, ought to be an integral part of the restructuring procedural pre-requisites. While on the one hand, the prescriptive approach represented by the US provides for this regulated incentive structure, English and German laws appear to be favorably disposed to a regime that is market-based, leaving the parties to determine the incentives and basis for new financing. This chapter closely examines what appears to be a capture of the restructuring process by the providers of new financing with pre-distress relationship with the borrower, using the new financing agreements to gain both financial and control advantages over other stakeholder constituencies, as well as over the distressed business as a whole. With this in mind, the chapter focuses on new financing by creditors, financial and control advantages that border on overreach, and the lessons that ...
New Financing for Distressed Businesses in the Context of Business Restructuring Law, 2019
In analyzing distressed debtor financing in restructuring regimes, it is important to understand ... more In analyzing distressed debtor financing in restructuring regimes, it is important to understand the commercial environment within which new financing is provided. It requires answers to practical questions such as: what financing options are open to a distressed borrower? What motivates the provision of financing for distressed businesses? How do the applicable rules affect the class of financing a potential lender may provide? Given that commercial banks have played (and in some countries) still play the lead role of traditional lenders, how suited are traditional lenders to financing distressed businesses and if they are not, what bespoke options exist? To understand the issues surrounding the financing of distressed businesses, it is fitting to start against a background which answers the questions above. It is of importance that the reader keeps in mind that the focus is on financially distressed businesses, which have already been defined as businesses unable to meet their deb...
African Journal of International and Comparative Law, 2020
Recently, the Nigerian Senate passed the Bankruptcy and Insolvency (Repeal and Re-enactment) Bill... more Recently, the Nigerian Senate passed the Bankruptcy and Insolvency (Repeal and Re-enactment) Bill. This is no doubt a welcome development following the continued demand by insolvency practitioners, academics and other stakeholders for such legislation. The call has not only been for the enactment of just about any legislation, but (consistent with the economic challenges faced by businesses in the country), one that is favourably disposed to the successful restructuring of financially distressed businesses, allowing them to weather the storm of (impending) insolvency, emerge from it and continue to operate within the economy. This article seeks to situate this draft legislative instrument within the present wave of preventive restructuring ably espoused in the European Union Recommendation on New Approaches to Business Rescue and to Give Entrepreneurs a Second Chance (2014), which itself draws largely from Chapter 11 of the US Bankruptcy Code. The article draws a parallel between th...
SSRN Electronic Journal, 2017
In 2015, Nigeria joined the league of countries that have reformed their secured transactions reg... more In 2015, Nigeria joined the league of countries that have reformed their secured transactions regime, with the enactment of the Central Bank of Nigeria (CBN) Regulation No. 1, 2015. This reform introduces a new wave of changes to the way by which personal property will be used in the future for the purpose of securing credit in Nigeria. Amongst other things, the Regulation provides a reconceptualization of personal property securities as conceptualized under English law to a functional system, such as that of UCC Article 9. More specifically, it introduces in some measure, self-help repossession and disposition as a means by which secured lenders may realize their security interests in the event that the debtor defaults in the repayment of the credit facility extended to the debtor.In this paper, I shall examine, from the viewpoint of behavioral law and economics (BLE), arguments that supports the case for the use of self-help repossession as provided for in the Regulation.
Journal of African Law, 2017
In response to the inability of micro, small and medium scale enterprises (MSMEs) to access credi... more In response to the inability of micro, small and medium scale enterprises (MSMEs) to access credit to finance their business operations, the governor of the Central Bank of Nigeria passed the Central Bank of Nigeria (Registration of Security Interests in Movable Property by Banks and Other Financial Institutions in Nigeria) Regulations, No 1, 2015. The purport of this regulation is, among other things, to ensure that MSMEs can use items of personal property to create security. This article critically examines the regulation in the light of the building blocks of article 9 of the US Uniform Commercial Code, which is not only a paradigmatic piece of legislation but appears to be the model on which the Nigerian regulation is based. This critical examination leads the authors to conclude that, although the regulation represents the first steps to reform, much more remains to be done to ensure effectiveness.
SSRN Electronic Journal, 2015
As human and commercial intercourse in society and market transactions increased, the need for cr... more As human and commercial intercourse in society and market transactions increased, the need for credit and the latitude for suspended payments have also increased. But something else also increased- the tendency of default by the debtor in making good the promise to repay. The predominant trend had been to liquidate or wind up the business, pay up (as much as possible) the creditors of the business and then the “owners” of the business (residual claimants) may have the remainder (if any) for themselves. This in itself was a result of some refinement from the very hostile disposition by different societies to insolvent persons whether in business or otherwise. In more recent times however, the emphasis appears to be shifting and the considerations also now seems to go beyond just the creditors but also to include other interests in the decision of what to do with an insolvent business. The growing attitude is to ask: “is the business better alive than dead”? “Will saving or rescuing the business not be more beneficial than allowing it wither away?” If there is some agreement that more benefits inure to the system by keeping an otherwise viable business alive, this will very well need the imprimatur of law.Nigeria is an emerging economy and presently “wears the garb” of Africa’s largest economy. The implication of this is that businesses ranging from corporations to MSMEs are setting up shop and seeking to corner their share of the market. The prospects of the economy notwithstanding, the lack of certain fundamentals may militate against the chances of many a business and one does not need to be a fortune teller or soothsayer to predict that such businesses will sooner or later be faced with illiquidity or cash flow challenges. Again, the question to be asked is whether to have such businesses go through the path of liquidation, leaving all other unsatisfied stakeholders to go home and cry. Or should the law provide a means of effecting the rescue of such businesses?This thesis aims to characterize the business rescue regime in Nigeria in the light of its inadequacy and the lack of a concrete policy of the law as presently constituted to rescue ailing businesses. It points out that although there exists some business rescue provisions in the relevant statutes, their practical relevance have been called into question. A case is therefore made for the adoption of tools provided for in Chapter 11 of the US Bankruptcy Act (as against those of the English law) considered to be pertinent in the quest for a business rescue regime for Nigeria. The thesis proposes the provision of a sweeping moratorium from creditor enforcement (automatic stay), the adoption of the principle of debtor-in-possession, and the legislative incentivizing of post insolvency financing for the distressed business by way of creating a super-priority position for the financer. In cases where the business has several creditors, creditor classification and voting will be key in achieving a successful re-organization plan and what to do with dissenting impaired creditors will arise. Hence the thesis explores the provision of necessary safeguards for the “impaired minority” in the imposition of the “will of the majority” in the interest of rescuing the business. The adaptation of these measures are proposed without losing sight of their applicability, especially in view of idiosyncratic differences that exist between both jurisdictions, the difference in societal sophistication and the comparable English law provisions.
Hungarian Journal of Legal Studies, 2017
In the 19th Century, Francis Galton made a case for framing British policy on Africa in terms of ... more In the 19th Century, Francis Galton made a case for framing British policy on Africa in terms of the replacement of Africa's 'negro' population with the 'China man' because the China man-had every desirable trait. This policy may never have materialised but today, the relationship between Africa and China has taken the form of expanded trade and economic relations with a huge influx of Foreign Direct Investment (FDI) from China to African states. This paper examines this burgeoning economic relationship through the lens of Bilateral Investment Treaties (BITs) entered into between China and African states. This paper examines some of the typical challenges posed by standard BITs and then examines how current China-Africa BITs have addressed those challenges.
Journal of Comparative Law in Africa
Small and Medium Enterprises (SMEs) play a significant role in the economy of developing countrie... more Small and Medium Enterprises (SMEs) play a significant role in the economy of developing countries. Although SMEs contribute to economic growth, they still struggle with access to finance and cash flow constraints. The coronavirus (COVID-19) pandemic worsened this situation, making it necessary for countries to develop rescue regimes suitable for financially distressed SMEs. Focusing on Nigeria and Kenya – which represent the largest economies in West Africa and East Africa respectively – this paper critically sheds light on the socio-legal challenges posed by extant insolvency law regimes in both countries and their unsuitability for driving SME rescue. As a conversation starter in the African context, the authors identify transplanted concepts and structures which make SME rescue a futility, in the light of local circumstances, while proposing solutions tailored to the social milieu of both countries.
Social Science Research Network, 2017
In the 19th Century, Francis Galton (the "father of eugenics") made a case for framing ... more In the 19th Century, Francis Galton (the "father of eugenics") made a case for framing British policy on Africa in terms of the replacement of Africans by the Chinese on the African continent. Many years down the road, the relationship between Africa and China has taken the form of expanded trade and economic relations, seeing a huge inflow of Foreign Direct Investment (FDI) in the direction of African states. This paper argues that it is important that businesses carried out as a consequence of this relationship adhere to standards of accountability, sustainability and responsibility, which are imperative for meaningful development on the African continent. Framing the Sino-African economic relations in the context of sustainable development and corporate accountability demands a benchmark, and the Bilateral Investment Treaty (BIT) is adopted in this paper as that benchmark. The paper goes on to conclude that while Sino-African BIT engagements do not show any clear exploi...
The Covid-19 pandemic has undeniably ravaged the global economy and plunged many countries in Afr... more The Covid-19 pandemic has undeniably ravaged the global economy and plunged many countries in Africa, including Kenya and Nigeria into an economic recession. This article departs from the premise that credit is the lifeblood of market systems. Accordingly, the credit and insolvency laws of both countries must be adjusted in certain ways during and after the pandemic, in order to enable them to cope with the dire economic challenges resulting from the pandemic. The article identifies some material defects in the Insolvency Act 2015 (Kenya) and the Companies and Allied Matters Act 2020 (Nigeria), and argues that these defects will debilitate a meaningful economic recovery from the pandemic. The paper shows the lack of suitability of their existing insolvency frameworks, as well as some aspects of the public law: it proposes a number of tailor-made recommendations that benefitted from the experiences of certain other common law jurisdictions.
Chapter 1 has provided a primer on the identity of new financing and the various modes of financi... more Chapter 1 has provided a primer on the identity of new financing and the various modes of financing the distressed debtor. While it is one thing to identify the financing options, it is another thing to situate those options within the extant frameworks which support the restructuring of a financially distressed business. On the one hand, although debt restructuring is essentially a private matter between the distressed debtor and the relevant creditors, it is also commonly agreed that the state has a role in facilitating the functioning of the economy. Without doubt, restructuring frameworks—whether found embedded in formal restructuring or ensconced in workout structures—play an important role in the functioning of market economies. Hence, through a comparative statutory, case law and normative analysis, the preoccupation of this chapter is to identify the key components (toolkit) that have been suggested to facilitate successful debt restructurings. Setting forth the ideal toolki...
Stellenbosch Law Review
The COVID-19 pandemic has no doubt impacted all countries of the world. In its wake, it has left ... more The COVID-19 pandemic has no doubt impacted all countries of the world. In its wake, it has left a trail of mortality and an economic crisis of immense proportions. As the virus continues to mutate and containment measures are introduced, the economic challenges posed by the pandemic continue to be felt by households and businesses. By arguing that times of economic crises provide an auspicious occasion for countries to rework their insolvency frameworks and their debt restructuring regimes, this article interrogates the existing debt restructuring regimes in both Kenya and Nigeria, as provided for in the Kenyan Insolvency Act 2015 and the Nigerian Companies and Allied Matters Act 2020, and considers the role of their statutes and institutions created to facilitate debt restructuring. The article further highlights key defects and proposes important and critical changes to these legal frameworks to ensure that they are sufficiently responsive to the pandemic-triggered crisis.
New Financing for Distressed Businesses in the Context of Business Restructuring Law, 2019
Chapter 4 examined the approaches to incentivizing new financing, which as noted is vital for a s... more Chapter 4 examined the approaches to incentivizing new financing, which as noted is vital for a successful restructuring and consequently, ought to be an integral part of the restructuring procedural pre-requisites. While on the one hand, the prescriptive approach represented by the US provides for this regulated incentive structure, English and German laws appear to be favorably disposed to a regime that is market-based, leaving the parties to determine the incentives and basis for new financing. This chapter closely examines what appears to be a capture of the restructuring process by the providers of new financing with pre-distress relationship with the borrower, using the new financing agreements to gain both financial and control advantages over other stakeholder constituencies, as well as over the distressed business as a whole. With this in mind, the chapter focuses on new financing by creditors, financial and control advantages that border on overreach, and the lessons that ...
New Financing for Distressed Businesses in the Context of Business Restructuring Law, 2019
In analyzing distressed debtor financing in restructuring regimes, it is important to understand ... more In analyzing distressed debtor financing in restructuring regimes, it is important to understand the commercial environment within which new financing is provided. It requires answers to practical questions such as: what financing options are open to a distressed borrower? What motivates the provision of financing for distressed businesses? How do the applicable rules affect the class of financing a potential lender may provide? Given that commercial banks have played (and in some countries) still play the lead role of traditional lenders, how suited are traditional lenders to financing distressed businesses and if they are not, what bespoke options exist? To understand the issues surrounding the financing of distressed businesses, it is fitting to start against a background which answers the questions above. It is of importance that the reader keeps in mind that the focus is on financially distressed businesses, which have already been defined as businesses unable to meet their deb...
African Journal of International and Comparative Law, 2020
Recently, the Nigerian Senate passed the Bankruptcy and Insolvency (Repeal and Re-enactment) Bill... more Recently, the Nigerian Senate passed the Bankruptcy and Insolvency (Repeal and Re-enactment) Bill. This is no doubt a welcome development following the continued demand by insolvency practitioners, academics and other stakeholders for such legislation. The call has not only been for the enactment of just about any legislation, but (consistent with the economic challenges faced by businesses in the country), one that is favourably disposed to the successful restructuring of financially distressed businesses, allowing them to weather the storm of (impending) insolvency, emerge from it and continue to operate within the economy. This article seeks to situate this draft legislative instrument within the present wave of preventive restructuring ably espoused in the European Union Recommendation on New Approaches to Business Rescue and to Give Entrepreneurs a Second Chance (2014), which itself draws largely from Chapter 11 of the US Bankruptcy Code. The article draws a parallel between th...
SSRN Electronic Journal, 2017
In 2015, Nigeria joined the league of countries that have reformed their secured transactions reg... more In 2015, Nigeria joined the league of countries that have reformed their secured transactions regime, with the enactment of the Central Bank of Nigeria (CBN) Regulation No. 1, 2015. This reform introduces a new wave of changes to the way by which personal property will be used in the future for the purpose of securing credit in Nigeria. Amongst other things, the Regulation provides a reconceptualization of personal property securities as conceptualized under English law to a functional system, such as that of UCC Article 9. More specifically, it introduces in some measure, self-help repossession and disposition as a means by which secured lenders may realize their security interests in the event that the debtor defaults in the repayment of the credit facility extended to the debtor.In this paper, I shall examine, from the viewpoint of behavioral law and economics (BLE), arguments that supports the case for the use of self-help repossession as provided for in the Regulation.
Journal of African Law, 2017
In response to the inability of micro, small and medium scale enterprises (MSMEs) to access credi... more In response to the inability of micro, small and medium scale enterprises (MSMEs) to access credit to finance their business operations, the governor of the Central Bank of Nigeria passed the Central Bank of Nigeria (Registration of Security Interests in Movable Property by Banks and Other Financial Institutions in Nigeria) Regulations, No 1, 2015. The purport of this regulation is, among other things, to ensure that MSMEs can use items of personal property to create security. This article critically examines the regulation in the light of the building blocks of article 9 of the US Uniform Commercial Code, which is not only a paradigmatic piece of legislation but appears to be the model on which the Nigerian regulation is based. This critical examination leads the authors to conclude that, although the regulation represents the first steps to reform, much more remains to be done to ensure effectiveness.
SSRN Electronic Journal, 2015
As human and commercial intercourse in society and market transactions increased, the need for cr... more As human and commercial intercourse in society and market transactions increased, the need for credit and the latitude for suspended payments have also increased. But something else also increased- the tendency of default by the debtor in making good the promise to repay. The predominant trend had been to liquidate or wind up the business, pay up (as much as possible) the creditors of the business and then the “owners” of the business (residual claimants) may have the remainder (if any) for themselves. This in itself was a result of some refinement from the very hostile disposition by different societies to insolvent persons whether in business or otherwise. In more recent times however, the emphasis appears to be shifting and the considerations also now seems to go beyond just the creditors but also to include other interests in the decision of what to do with an insolvent business. The growing attitude is to ask: “is the business better alive than dead”? “Will saving or rescuing the business not be more beneficial than allowing it wither away?” If there is some agreement that more benefits inure to the system by keeping an otherwise viable business alive, this will very well need the imprimatur of law.Nigeria is an emerging economy and presently “wears the garb” of Africa’s largest economy. The implication of this is that businesses ranging from corporations to MSMEs are setting up shop and seeking to corner their share of the market. The prospects of the economy notwithstanding, the lack of certain fundamentals may militate against the chances of many a business and one does not need to be a fortune teller or soothsayer to predict that such businesses will sooner or later be faced with illiquidity or cash flow challenges. Again, the question to be asked is whether to have such businesses go through the path of liquidation, leaving all other unsatisfied stakeholders to go home and cry. Or should the law provide a means of effecting the rescue of such businesses?This thesis aims to characterize the business rescue regime in Nigeria in the light of its inadequacy and the lack of a concrete policy of the law as presently constituted to rescue ailing businesses. It points out that although there exists some business rescue provisions in the relevant statutes, their practical relevance have been called into question. A case is therefore made for the adoption of tools provided for in Chapter 11 of the US Bankruptcy Act (as against those of the English law) considered to be pertinent in the quest for a business rescue regime for Nigeria. The thesis proposes the provision of a sweeping moratorium from creditor enforcement (automatic stay), the adoption of the principle of debtor-in-possession, and the legislative incentivizing of post insolvency financing for the distressed business by way of creating a super-priority position for the financer. In cases where the business has several creditors, creditor classification and voting will be key in achieving a successful re-organization plan and what to do with dissenting impaired creditors will arise. Hence the thesis explores the provision of necessary safeguards for the “impaired minority” in the imposition of the “will of the majority” in the interest of rescuing the business. The adaptation of these measures are proposed without losing sight of their applicability, especially in view of idiosyncratic differences that exist between both jurisdictions, the difference in societal sophistication and the comparable English law provisions.
Hungarian Journal of Legal Studies, 2017
In the 19th Century, Francis Galton made a case for framing British policy on Africa in terms of ... more In the 19th Century, Francis Galton made a case for framing British policy on Africa in terms of the replacement of Africa's 'negro' population with the 'China man' because the China man-had every desirable trait. This policy may never have materialised but today, the relationship between Africa and China has taken the form of expanded trade and economic relations with a huge influx of Foreign Direct Investment (FDI) from China to African states. This paper examines this burgeoning economic relationship through the lens of Bilateral Investment Treaties (BITs) entered into between China and African states. This paper examines some of the typical challenges posed by standard BITs and then examines how current China-Africa BITs have addressed those challenges.
Journal of Comparative Law in Africa
Small and Medium Enterprises (SMEs) play a significant role in the economy of developing countrie... more Small and Medium Enterprises (SMEs) play a significant role in the economy of developing countries. Although SMEs contribute to economic growth, they still struggle with access to finance and cash flow constraints. The coronavirus (COVID-19) pandemic worsened this situation, making it necessary for countries to develop rescue regimes suitable for financially distressed SMEs. Focusing on Nigeria and Kenya – which represent the largest economies in West Africa and East Africa respectively – this paper critically sheds light on the socio-legal challenges posed by extant insolvency law regimes in both countries and their unsuitability for driving SME rescue. As a conversation starter in the African context, the authors identify transplanted concepts and structures which make SME rescue a futility, in the light of local circumstances, while proposing solutions tailored to the social milieu of both countries.
Social Science Research Network, 2017
In the 19th Century, Francis Galton (the "father of eugenics") made a case for framing ... more In the 19th Century, Francis Galton (the "father of eugenics") made a case for framing British policy on Africa in terms of the replacement of Africans by the Chinese on the African continent. Many years down the road, the relationship between Africa and China has taken the form of expanded trade and economic relations, seeing a huge inflow of Foreign Direct Investment (FDI) in the direction of African states. This paper argues that it is important that businesses carried out as a consequence of this relationship adhere to standards of accountability, sustainability and responsibility, which are imperative for meaningful development on the African continent. Framing the Sino-African economic relations in the context of sustainable development and corporate accountability demands a benchmark, and the Bilateral Investment Treaty (BIT) is adopted in this paper as that benchmark. The paper goes on to conclude that while Sino-African BIT engagements do not show any clear exploi...
The Covid-19 pandemic has undeniably ravaged the global economy and plunged many countries in Afr... more The Covid-19 pandemic has undeniably ravaged the global economy and plunged many countries in Africa, including Kenya and Nigeria into an economic recession. This article departs from the premise that credit is the lifeblood of market systems. Accordingly, the credit and insolvency laws of both countries must be adjusted in certain ways during and after the pandemic, in order to enable them to cope with the dire economic challenges resulting from the pandemic. The article identifies some material defects in the Insolvency Act 2015 (Kenya) and the Companies and Allied Matters Act 2020 (Nigeria), and argues that these defects will debilitate a meaningful economic recovery from the pandemic. The paper shows the lack of suitability of their existing insolvency frameworks, as well as some aspects of the public law: it proposes a number of tailor-made recommendations that benefitted from the experiences of certain other common law jurisdictions.
Chapter 1 has provided a primer on the identity of new financing and the various modes of financi... more Chapter 1 has provided a primer on the identity of new financing and the various modes of financing the distressed debtor. While it is one thing to identify the financing options, it is another thing to situate those options within the extant frameworks which support the restructuring of a financially distressed business. On the one hand, although debt restructuring is essentially a private matter between the distressed debtor and the relevant creditors, it is also commonly agreed that the state has a role in facilitating the functioning of the economy. Without doubt, restructuring frameworks—whether found embedded in formal restructuring or ensconced in workout structures—play an important role in the functioning of market economies. Hence, through a comparative statutory, case law and normative analysis, the preoccupation of this chapter is to identify the key components (toolkit) that have been suggested to facilitate successful debt restructurings. Setting forth the ideal toolki...
Stellenbosch Law Review
The COVID-19 pandemic has no doubt impacted all countries of the world. In its wake, it has left ... more The COVID-19 pandemic has no doubt impacted all countries of the world. In its wake, it has left a trail of mortality and an economic crisis of immense proportions. As the virus continues to mutate and containment measures are introduced, the economic challenges posed by the pandemic continue to be felt by households and businesses. By arguing that times of economic crises provide an auspicious occasion for countries to rework their insolvency frameworks and their debt restructuring regimes, this article interrogates the existing debt restructuring regimes in both Kenya and Nigeria, as provided for in the Kenyan Insolvency Act 2015 and the Nigerian Companies and Allied Matters Act 2020, and considers the role of their statutes and institutions created to facilitate debt restructuring. The article further highlights key defects and proposes important and critical changes to these legal frameworks to ensure that they are sufficiently responsive to the pandemic-triggered crisis.