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Nigeria: Senate to Create Corporation to Manage Toxic Assets

(Mar. 17, 2010) It was reported on March 11, 2010, that as part of an effort to reform the Nigerian banking industry, the Nigerian Senate is considering a bill that would establish a corporation to deal with “non performing loan assets of banks in Nigeria” (also known as toxic assets). (Cosmas Ekpunobi, Senate Okays Local Content Bill, DAILY CHAMPION, Mar. 11, 2010, available at The bill passed a second reading and was forwarded to the Committee on Banking, Insurance and Other Financial Institutions, which is expected to report back to the Senate in two weeks. (Abdul-Rahman Abubakar & Turaki A. Hassan, Asset Management Bill Passes Second Reading, DAILY TRUST, Mar. 12, 2010, available at

According to Senate leader Teslim Folarin, if enacted, the bill will create a corporation with the power “to act as or appoint a receiver/manager for a debtor company whose assets have been pledged as collateral for an eligible loan acquired by the corporation.” (Ekpunobi, supra.) The corporation will also have the power to compel a bank to freeze further transactions on remaining funds in the account of the debtor, if any. (Abubakar & Hassan, supra.) In addition, the corporation is to be appointed as the trustee of the debtor's property in the event that the debtor goes bankrupt. (Id.)