NDIC seeks lawyers’ support to recover assets of defunct banks

The Nigeria Deposit Insurance Corporation (NDIC) is intensifying its efforts to collaborate more effectively with external solicitors, particularly in the critical areas of debt recovery and asset management for failed banks.

Bello Hassan, NDIC Managing Director made the appeal during a sensitization seminar for external solicitors, Thursday in Abuja.

This move follows the recent failure of Heritage Bank, which highlighted the intricate nature of bank liquidation and the vital role of legal collaboration in such processes.

The NDIC boss emphasised that successful debt recovery and asset realization are crucial to fulfilling the Corporation’s corporate objectives, including settling uninsured deposits and legitimate creditor claims.

He noted that out of the four core mandates enshrined in the Nigeria Deposit Insurance Act 2023 – deposit guarantee, bank supervision, resolution of failing financial institutions, and the orderly liquidation of banks whose licenses have been revoked by the Central Bank of Nigeria – the latter is a critical function requiring the lawyers’ support to efficiently discharge the mandate and maintain the financial system stability.

“I urge you, external solicitors, to continue your diligent efforts in assisting the Corporation with debt recovery and asset realization,” Hassan pleaded.

He explained that liquidation is intertwined with litigation, and that in fulfilling its responsibilities, NDIC engages in legal proceedings both as plaintiff and defendant, representing the interests of depositors and creditors while also pursuing debt recovery from debtors of closed banks.

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“The recovery of these debts and the realization of assets are crucial to achieving our corporate objectives,” he stated.

He noted that beyond settling the insured sums to depositors, the NDIC, as a liquidator, is also responsible for settling the uninsured portions of deposits and all legitimate creditor claims using the realized assets of the institution undergoing liquidation.

He expressed satisfaction that the Corporation has consistently met this obligation, largely due to successful collaborations, including significant contributions from external legal advisors.

He underscored the pivotal role of lawyers in the liquidation process, highlighting that successful asset recovery is essential for enabling the Corporation to fulfill its obligations.

These include settling uninsured deposits, addressing contractor claims, and distributing liquidation dividends to investors.

While acknowledging the complex legal challenges involed in debt recovery and asset realization efforts, he urged solicitors to persist in their diligent work, emphasizing the importance of their role in assisting the NDIC.

He reaffirmed the Corporation’s commitment to collaborating with stakeholders to enhance public understanding of deposit insurance practices in Nigeria, ultimately contributing to a more stable financial system.

Hassan also praised external solicitors for their ongoing support, highlighting how their involvement had improved the handling of NDIC cases, led to more informed judicial decisions, and increased public awareness of deposit insurance in Nigeria.