A review of the Neconde OML 42 / Nestoil case
At the Supreme Court, where legal doctrine often intersects with commercial reality, Neconde Energy Limited has placed before the apex court a dispute that could redefine the limits of receivership and corporate self-representation in Nigeria. In Appeal No: SC/CV/48/2026, the company poses a seemingly simple yet far-reaching question: can a company under receivership be stripped of the right to appoint its own counsel when the validity of that receivership is itself under judicial challenge? Wale Jacobs writes
Ehat began as a commercial dispute involving an oil asset has evolved into a constitutional and corporate law contest with significant implications for secured lending, insolvency practice, and access to justice. At the heart of the matter is Neconde’s insistence that receivership does not extinguish corporate personality, nor does it silence a company in proceedings that determine its fate.
This high-stakes legal battle, is expected to have far-reaching consequences for corporate insolvency, lender enforcement, and company law in Nigeria.
The dispute arose from the alleged approximately $1 billion indebtedness of Nestoil to a consortium of lenders. The Lenders allegedly also took a second ranking charge over an oil Asset belonging to Neconde, as part of security for loan. Following an alleged default on repayment obligations by Nestoil, a Receiver/Manager was appointed to take control of both companies’ operations and assets, including oversight of their financial affairs and legal representation. The appointment immediately became a flashpoint, as the companies’ promoters and management sought to maintain some degree of control—particularly in instructing legal counsel to represent them in ongoing proceedings.
The core legal question became whether a company retains the residual power to appoint its own counsel during a receivership, especially when the validity of the Receiver’s appointment is itself under judicial challenge.
Neconde’s Case for Independent Counsel
Neconde, through a legal team led by Chief Wole Olanipekun, SAN, alongside Bode Olanipekun, SAN, Mofesomo Tayo-Oyetibo, SAN, and four other senior lawyers, insisted on the right to engage counsel independently of the Receiver. The team argued that the companies, as separate legal entities, retained residual powers to act, sue, and be sued under the Companies and Allied Matters Act (CAMA), notwithstanding the receivership.
They contended that excluding them from appointing counsel would undermine their fundamental rights as corporate entities and potentially prejudice their interests in the ongoing financial and contractual disputes.
In response, the Receiver/Manager Abubakar Sulu Gambari SAN appointed by the lenders represented by FBN Quest Merchant Bank Ltd and FBN Trustees Ltd argued that, once a receivership is triggered, the company’s power to instruct counsel transfers exclusively to the Receiver. Any independent legal instruction by the company or its promoters, the Receiver asserted, could conflict with the overarching mandate of the receivership and compromise the integrity of the enforcement process.
Court of Appeal Ruling
The dispute over legal representation became so critical that the Supreme Court intervened. In an earlier directive, the apex court ordered all parties to return to the Court of Appeal to resolve the contentious issue of counsel representation before reporting back on 26 January 2026. This instruction aimed to clarify procedural authority within the receivership and ensure further litigation adhered to the proper legal framework.
The Court of Appeal delivering its ruling on Friday, 23 January 2026, stated that the Receiver/Manager has exclusive authority to appoint counsel on behalf of the companies. In that ruling, the appellate court explicitly disqualified Chief Wole Olanipekun, SAN, and Muiz Banire, SAN, from representing Neconde and Nestoil, respectively. The court reasoned that allowing directors or promoters to brief separate counsel while a receiver is in place would undermine the essence of receivership and could lead to conflicting legal strategies, compromising creditor interests.
The Court of Appeal stressed that a Receiver/Manager, once appointed, assumes comprehensive responsibility for the management of the company’s assets and legal affairs—including the engagement of lawyers to represent the company.
Neconde’s Appeal to the Supreme Court
Dissatisfied with the Court of Appeal’s ruling, Neconde and Nestoil sought recourse at the Supreme Court. They argued that the lower court failed to recognise a key exception under Nigerian law: when the validity of a Receiver’s appointment or the scope of their powers is under judicial challenge, the company retains the right to appoint counsel to protect its interests.
From the outset, Neconde has maintained that its obligations under the relevant security instruments had not crystallised. The company argues that the charge relied upon by the respondents, (FBNQuest Merchant Bank Limited and First Trustees Limited) was subordinate, expressly designated as second-ranking, and therefore incapable of justifying enforcement steps as drastic as receivership without prior exhaustion of senior security rights.
Even the holders of the senior security rights , allege that the junior second – ranking security charge was created without their consent and is therefore invalid.
A central plank of Neconde’s appeal is a forensic examination of the deed of charge. Clause 1.4 acknowledges Neconde Energy Limited as a significant player in Nigeria’s upstream oil and gas sector, with interests tied to Oil Mining Lease 42. The dispute arose when the first and second respondents—FBNQuest Merchant Bank Limited and First Trustees Limited, acting as facility agents for a consortium of creditors—purportedly appointed Abubakar Sulu-Gambari, SAN, as receiver-manager over certain Neconde assets, including OML 42 joint venture contracts.
The respondents argued that the appointment flowed naturally from the security documents allegedly executed by Neconde in relation to certain financing arrangements. Neconde, however, insists that the appointment was premature, legally unfounded, and inconsistent with the express terms of the security documents, which explicitly subordinated the charge to senior security instruments.
Accordingly, Neconde argues that it does not owe the Nestoil Lenders and also that its obligations under the alleged second- ranking security charge had not crystallised. Therefore, there was no lawful basis for the lenders acting through FBN Quest and First Trustees to appoint a receiver. Importantly, it contends that where the receivership’s foundation is disputed, the law cannot proceed on the assumption that the receiver’s powers are valid and unassailable.
The Originating Summons and Preliminary Objection
The dispute entered the judicial arena when the respondents filed an originating summons before the Federal High Court in Lagos, seeking declarations on the receivership and the receiver’s powers. Neconde responded by filing a joint preliminary objection, spanning pages 1780 to 1835 of Volume 4 of the record.
The objection challenged the competence of the action, the validity of the receiver’s appointment, and the enforceability of the security documents. Of particular note was a relief seeking suspension of the receiver—an assertion that Neconde viewed the receivership as legally infirm and incapable of withstanding judicial scrutiny.
Neconde also highlighted that the alleged obligations under the security documents had not crystallised. The respondents, Neconde argued, were attempting to enforce immature rights through receivership rather than through legally justified remedies.
It was against this backdrop that the procedural battle over who could appoint counsel emerged. While the validity of the receivership was being contested, the respondents maintained that only the receiver could instruct counsel, a position Neconde emphatically rejected. The company asserts that Nigerian law does not preclude a company under a contested receivership from appointing counsel to represent it in proceedings questioning the receiver’s authority. This assertion forms the doctrinal spine of the appeal now before the Supreme Court.
Receivership and the Myth of Absolute Control.
Uncontested valid receiverships does affects directors’ powers. Upon valid appointment, certain managerial powers are suspended to enable a receiver to carry out their mandate. But where the appointment is invalid or contested, there lies an issue.
Indeed, the Federal High Court acknowledged that the suspension of directors’ powers during receivership is not absolute. It is therefore argued that this principle should have been the starting point for judicial analysis, not the conclusion. Legal experts point to the well-established exception that, when a receiver’s appointment or authority is contested, directors retain residual powers, chief among them the authority to appoint counsel.
They stress that a company retains rights, obligations, and procedural capacities during receivership. To suggest it cannot appoint counsel to defend itself in proceedings that challenge the receiver’s authority, is to deny the company’s existence for the duration of the dispute.
Conflict of Interest and Fair Hearing
The appeal also raises fundamental fairness issues. The same respondents who appointed the receiver also placed the receiver’s powers before the court for judicial determination. Neconde argues it would be unjust to insist that the receiver alone can appoint counsel, as this would allow the receiver to control the defence in a case questioning their own legitimacy.
Denying the company the right to independent counsel, Neconde submits, undermines its constitutional right to fair hearing. A company unable to choose its legal representation in proceedings that determine its rights, assets, and future is effectively denied meaningful access to justice.
While the Court of Appeal in its ruling acknowledged the principle that directors’ powers are not absolutely suspended, they allegedly failed to give effect to the exception preserving directors’ residual authority when receivership is contested. Neconde contends this led to the erroneous conclusion that only the receiver could appoint counsel.
Now before the Supreme Court, the case carries heightened significance. Represented by a formidable team led by Chief Wole Olanipekun, SAN as lead counsel, Neconde seeks clarity on a legal principle with broad implications for future receiverships and enforcement actions across Nigeria.
The outcome is likely to resonate beyond Neconde, Nestoil and its creditors. For lenders, it reinforces that enforcement powers, however robust, are not immune from judicial scrutiny. For companies, it underscores that corporate voice and autonomy cannot be extinguished by a disputed receivership.
Ultimately, Neconde Energy’s appeal asks whether receivership, as powerful as it is, can erase corporate personality or the right to appoint counsel to defend the company.
The case stands poised to become a defining authority on receivership, residual powers, and the right to counsel in Nigeria’s corporate and commercial jurisprudence.
-ThisDay
