Intercontinental Hotel Group's Exit from Nigeria: Analysis of a Receiver/Manager's Discretion to Repudiate Pre-Receivership Contracts

Abstract

Intercontinental Lagos Hotel has been rechristened “Lagos Continental Hotel”. The renaming of the 358-room five-star hotel followed the termination of a six-year Hotel Management Agreement (“HMA”) between the hotel owners, Milan Industries Ltd (Milan) and multinational hotels company, Intercontinental Hotels Group (“IHG”). On 3 January 2018 IHG issued a notice of termination of the HMA with effect from 18 January 2018. IHG alleged non-cooperation by Milan’s receiver/manager in ensuring that the hotel avoided a material breach of the HMA and maintained its operating licence. IHG further alleged Milan owed IHG NGN995,223,818 in fees. The financial woes of Milan came into limelight in May 2017 when a Federal High Court ordered the takeover of the hotel by a receiver/manager appointed by Skye Bank Plc. Court processes showed that Skye Bank granted Milan loan facilities of US$29.8million and NGN3.8billion and an overdraft facility of NGN500million. The facilities were to finance the construction of the hotel. The loans were secured by a deed of legal mortgage which covered the hotel. Milan reportedly defaulted resulting in the appointment of the receiver/manager.