BOFIA 2020 and the New Regime for Banks’ Insolvency and Restructuring in Nigeria

Banks play a pivotal role in economic development globally and so the systemic risk posed by bank failures (for example, the 2008 global financial crisis) necessitates the creation of a special regime for the insolvency and restructuring of distressed banks. This special insolvency regime for banks helps to fortify the stability of the financial system and to maintain public confidence in the banking system in order to foster economic growth and development. In this regard, Nigeria passed the Banks and other Financial Institutions Act 2020 (BOFIA 2020) into law on 13 November 2020, repealing the erstwhile Banks and other Financial Institutions Act 1991 (BOFIA 1991). The new Act (BOFIA 2020) makes provisions for a more modern, more conducive and more business-friendly legal framework for the insolvency and restructuring of banks and other financial institutions (OFIs) in Nigeria. This paper highlights and explores the significance of some of these specific provisions in that context.