By Oke Peter
The removal of Nestoil Limited’s legal team from a high-profile debt recovery suit is the result of a procedural battle over corporate control rather than a ruling on the substance of the claims before the court. The decision, delivered by the Court of Appeal, has placed the spotlight firmly on who has the legal authority to act for a company once a receiver has been appointed in a contested banking dispute.
The matter arose from a long-running disagreement between Nestoil, its affiliate Neconde Energy Limited, and a consortium of lenders led by FBNQuest Merchant Bank Limited and First Trustees Limited. The banks allege that Nestoil and related entities defaulted on several credit facilities granted over the years to fund oil and gas operations, resulting in an outstanding liability running into hundreds of billions of naira and, when dollar-denominated facilities and guarantees are considered, sums approaching two billion dollars. Nestoil has consistently disputed both the quantum of the debt and the manner in which the lenders sought to enforce it.
In October 2025, the Federal High Court in Lagos granted far-reaching interim orders at the instance of the lenders. These included a Mareva injunction freezing Nestoil’s accounts and assets across numerous banks and authorising the appointment of a receiver-manager to take control of specified assets pending the determination of the substantive suit. The court’s order was aimed at preserving assets and preventing their dissipation while the debt claims were being litigated.
Nestoil reacted by challenging the orders, arguing that they were excessive, obtained without proper disclosure, and prejudicial to its ongoing business. In the course of these challenges, the company continued to be represented by a team of senior lawyers appointed by its board of directors. However, the existence of a receiver appointment introduced a fundamental legal question: whether the board retained the power to instruct counsel once a receiver had been installed pursuant to a court order.
In its ruling, the appellate court held that the appointment of a receiver had the effect of suspending the powers of the company’s directors in relation to the assets and affairs placed under receivership. As a consequence, the court found that the board which engaged Nestoil’s lawyers lacked the requisite authority to do so at the material time. The implication was that only the receiver, acting within the scope of the receivership, could validly appoint legal representation for the company in proceedings touching on those assets.
On that basis, the Court of Appeal struck out all processes filed by the affected lawyers and ordered that they cease to represent Nestoil and Neconde in the ongoing dispute. The decision is widely described as a “sack” of the lawyers, though the court was careful to make clear that its ruling did not reflect on their competence, integrity, or the merits of the arguments they advanced. Rather, it was a strict application of corporate and insolvency principles governing authority and representation.
The ruling followed earlier directions from the Supreme Court, which had declined to delve into the substantive issues and instead instructed the parties to return to the Court of Appeal to resolve the preliminary question of proper representation. That instruction underscored the importance the courts placed on settling the issue of authority before any further steps could be taken in the debt litigation.
For Nestoil, control of its defence strategy in the affected proceedings now rests with the receiver or with lawyers appointed through the receiver, unless the receivership itself is successfully challenged or discharged. For the banks, the ruling reinforces their position that once a receiver is lawfully appointed, the company’s management cannot act in ways that undermine the receivership.
Ultimately, the sack of Nestoil’s lawyers is a reminder that in complex financial disputes, procedural issues can be just as decisive as the underlying commercial arguments. While the central question of how much, if anything, Nestoil owes the banks remains unresolved, the appellate court’s decision has reshaped the battlefield by determining who is entitled to speak for the company while that question is fought out in court.
