AN EXAMINATION OF THE CONSEQUENCE OF INABILITY TO PAY DEBT ON CORPORATE EXISTENCE UNDER SECTION 572 OF COMPANIES AND ALLIED MATTERS ACT, 2020

Abstract

There is no concise meaning as to what can be held to be inability of a company to pay its debt. Though, there is provision under the Companies and Allied Matters Act 2020 on how it could be said that a company is inability to pay its debt. Ordinarily, if a company has no money to pay its debt or settle its debt, it is obvious that the company is insolvent. There could be however the situations when a company has money but has willfully refused to pay its debt. The Companies and Allied Matters Act 2020 has not made provision in respect to such scenario. The methodology adopted in the article is doctrinal. The Companies and Allied Matters Act 2020 as it relates to the article was examined together with other relevant laws on the subject. Since the issue of a company inability to pay its debt means that the company is insolvent, it is recommended that the provisions of the Companies and Allied Natters Act should be amended to bring insolvency matters in line with the current global best practices, It is concluded that there should be a single law on insolvency in Nigeria, dealing with all issues relating to a company inability to pay its debt.