April 24, 2020
KMO LEGAL INSIGHTS – APRIL 2020 (VOL. 3)
AN APPRAISAL OF THE PRACTICE DIRECTION FOR REMOTE HEARING OF CASES IN THE LAGOS STATE JUDICIARY – BY FELIX AYEM (ASSOCIATE)
Faced with COVID-19 pandemic and its attendant devastating effects on economic, religious and social activities across the world, businesses, institutions and governments have been left with no choice than to temporarily shut down.
On the 23rd of March, 2020, the Chief Justice of Nigeria issued a circular to all Heads of Courts directing the suspension of all court sittings for an initial period of two weeks with effect from the 24th March, 2020. The directive on the lockdown of courts in the country was extended indefinitely on the 6th of April, 2020. This has brought the court system and its administration in the country to a standstill, causing enormous damage to the justice delivery system in the country.
The foregoing has necessitated the use of alternative measures in order to maintain the existence of a functional judicial system and the administration of justice in the country. Thus, online platforms such as Skype, Zoom, WhatsApp, etc are being embraced as alternative means for court proceedings instead of the hitherto physical appearances in courts due to the upsurge in the pandemic.
At the forefront of this novel idea is the Lagos State Judiciary which recently announced its readiness to issue a Practice Direction for the Remote Hearing of Cases in Lagos (Practice Direction). When this Practice Direction comes into effect, it will help in the promotion and speedy delivery of justice in Lagos State as some selected cases would be remotely heard using suitable electronic platforms.
Download full Newsletter here REMOTE HEARING IN LAGOS STATE as a pdf document.
April 17, 2020
KMO LEGAL INSIGHTS – APRIL 2020 (VOL 2)
IS DEBT FACTORING A SOLUTION TO CREDIT IN THE FACE OF COVID 19 PANDEMIC – FELIX AYEM (ASSOCIATE)
The entire world has been greeted with a rude health shock occasioned by the outbreak of the coronavirus (COVID-19) pandemic which started in Wuhan China in November 2019 with increasing number of infections across the globe on a daily basis. This has brought all aspects of human endeavors to a standstill, resulting to a near total collapse of economic, social and to some extent, political activities. According to the International Monetary Fund (IMF), the coronavirus pandemic will turn global economic growth “sharply negative” in 2020, triggering the worst fall-out since the 1930s Great Depression, with only a partial recovery seen in 20211 . In Nigeria, the Minister for Finance, Budget and Planning, Mrs. Zainab Ahmed earlier warned that if the coronavirus pandemic continues for the next couple of months, Nigeria will definitely go into another recession. There is no gain saying the fact that COVID-19 has become a major concern to businesses and governments across the world. In view of the apparent complex and hazardous economic situation, it is necessary for businesses and most especially those in the financial sector to look inward for possible solutions to cushion the negative effects of the pandemic on businesses and the ability of debtors to meet their debt obligations to creditors. One of the veritable ways of managing credit at this critical stage of dwindling economic activities in the face of COVID-19 is by way of “Debt Factoring”.
What is debt factoring?
Factoring is a financial transaction and a type of debtor finance in which a business sells its accounts receivable (i.e., invoices) to a third party (called a factor) at a discount. Factoring could be in the form of accounts receivable factoring, invoice factoring, and sometimes accounts receivable financing.
Download full newsletter here Is Debt Factoring a Solution to Credit in the Face of COVID-19 Pandemic as a pdf document.
April 9, 2020
KMO LEGAL INSIGHTS – APRIL 2020 (vol 1)
Apart from the high infection and mortality rate that the coronavirus pandemic has left on its wake, several economies and businesses are also feeling the pains. The outbreak is triggering “an economic crisis whose violence is set to exceed anything we have previously witnessed.”1 Aside the disruptive energy crisis it has also caused, the consequent social distancing and work-from-home directives have led to a virtual collapse of all economic activity across the globe, with the world now in yet another recession.2
Businesses are seeing their revenue streams thin out. The primary concerns for most companies at this point are their cash flow and liquidity, and how to weather the storm, which are now leading corporations to save cash, cut costs, suspend capital investments and, if things get out of hand, – as they sometimes inevitably do – lay off staffs. All over, there is a certain air of inevitability that a lot of businesses will slip into bankruptcy and that even others that are able to scale through (at least in the short term) may do so only by deferring or defaulting on payments.
These unsettling economic effects of the pandemic are already giving businesses serious concern, particularly those relying on credit financing with regards to their ability to meet their debt obligations. Financial institutions are also becoming worried about their own potential to make good their advancements and ensure that non-performing loans stay within manageable thresholds.
Against this backdrop, lenders and borrowers alike will do well to become proactive about protecting and preserving their respective positions in light of the economic downturn and in a bid to ensure liquidity and provide cash flow for companies even if only as far as staying afloat or clearing a path toward viable future operations. One of those options available to both parties and which promises the most convenient and beneficial returns in light of the current economic climate is debt restructuring.
What is Debt Restructuring?
Debt restructuring is a process that allows a company or a sovereign entity facing cash flow problems and financial distress to renegotiate and reduce its delinquent/distressed debts in order to improve or restore liquidity so that it can continue its operations.
Download full Newsletter here : KMO Legal Insights 2nd as pdf document.
