Bank NPLs (15) - AMCON and Its Role in Debt Recovery


Saturday, May 30, 2020/ 06:25 AM / by Debtors Africa/ Header Image Credit:   EcoGraphics

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The Asset Management Corporation of Nigeria and Its Role in Debt Recovery


The Asset Management Corporation of Nigeria was created on the 19th of July 2010, via the AMCON Act No. 4, 2010. The AMCON Act was subsequently amended on the 25th of May, 2015 and became known as the AMCON Amendment Act, 2015. AMCON was established to bring stability and revive the financial system by taking on the job of resolving the problem of Non-Performing Loans (NLPs). 


The Act was further re-amended in 2019 to broaden the powers of AMCON and help it to better achieve the purpose for which it was set up. The amendment stripped off the layer of protection afforded by bank- client privacy by giving the corporation powers to dig into the financial details of debtors and call up any record or trace any fund of any debtor held in Nigeria or in a foreign country. AMCON can now access financial details of debtors and place their accounts under surveillance - a new development that would relieve AMCON and its AMPs of the onerous responsibility and often futile endeavour of locating debtors' accounts in financial institutions.


The amendment also empowers the Corporation to make a list of debtors and make same available to the government and also issue a statement that a debtor is not in good standing thus make contracting with the government impossible 


AMCON was setup with the following mandate:


  • To positively impact and improve the economy of Nigeria by;
  • Complementing the recapitalization of affected Nigerian banks;
  • Providing an opportunity for banks to sell off Non-Performing Loans(NPLs);
  • Freeing up valuable resources and enabling banks to focus on their core activities.
  • To propel the lending ideology in banks again.


  • To be a key stabilizing and re-vitalizing tool in the Nigerian economy


Objectives of AMCON

Section 4 AMCON Act, 2010 provides the objectives of AMCON as follows;

  • Assists eligible financial institutions to efficiently dispose of eligible bank assets in accordance with the provisions of the AMCON Act.
  • Efficiently manage and dispose of eligible bank assets acquired by the corporation in accordance with the provisions of the Act.
  • Obtain the best achievable financial returns on eligible bank assets or other assets acquired by it.


A period of 10 years was set for it to achieve its aims after which it would be wound up. With that sunset period barely 6 months away, and an outstanding debt of over 5 trillion Naira, a lot of questions loom large on the horizon.


How has AMCON gone about trying to fulfil its mandate in the light of the systemic nature of the bad debts?


AMCON, AMPs and Debt Recovery Turnaround - First Glance

In a manner of speaking, AMCON's role has been a risk-transfer or risk-sharing partnership. And in a way, this has been a good thing for the market, depending on who is asked. The establishment of the Act and AMCON was necessitated by the financial market crash of 2008 and the concomitant defaults in the banking system. When viewed from this perspective, one can argue that AMCON has helped sanitise the process of loan origination in Nigerian banks. Previously, banks did not take careful consideration of the quality of the loans written on their books, so long as borrowers guarantee interest payments and the loan principal. Now, Nigerian banks are even more conservative regarding the loans they originate, and are seeing default levels at perhaps its lowest since 2008. By having AMCON absorb most of those bad loans on the books of the banks, the banks were freed to continue lending and maintain quality loans of their portfolio, invariably reducing their risk-weighted assets. And since AMCON is a specialised institution, it can acquire the burden of debt recovery or agree to restructuring some of these loans, without adversely affecting the banking system. 

Judicial Precedents


 Case Studies of Debt Recoveries

(a)AMCON V. GALAXY ENGINEERING LIMITED SUIT NO. FHC/PH/MISC/78/2019: Amount owed is N31,477,653.00 (Thirty One Million Four Hundred and Seventy Seven Thousand Six Hundred and Fifty Three Naira) Only. An Interim Court Order has been executed to take over the property of the obligor located at KM 4, Rumuolumeni/Eagle Cement, Port Harcourt, River State. The obligor was given an offer letter to pay the sum of 7,000,000:00 (Seven Million Naira) on or before December 31, 2019. However, the terms of the offer were not met and obligor has written to AMCON for a 3-month grace and this is being reviewed.



A foreclosure suit was filed at Federal High Court, Asaba and the court ordered that the obligor's property be attached and his account frozen. The Court has attached the obligor's property at Airport road Benin City which has been foreclosed and his accounts has been frozen although no money was found in any of the obligor's account. The obligor is yet to pay any money. The Case came up on January 25, 2020 and our sole witness Mr. Kamal Muhammed was present. The case was adjourned to February 11 2020, for a final judgement to be given. However, the Obligor is still in communication and trying to raise the money to settle out of court.


(c) AMCON V. DUAL ENGINEERING SERVICES LIMITED (Amount owed is N74,663,591.78) The matter came up on October 08, 2019 in Asaba and an Interim Court Order has been granted to freeze the obligors bank accounts and take over the obligor's property. The obligor's property has been foreclosed and the case came up on January 24, 2020. However, the case has been adjourned for another one month and the obligor is currently trying to raise the money before the next adjourned date.



The obligor is owing the sum of N12, 674, 200 (Twelve million six hundred and seventy-four thousand naira only). She refused to liquidate same despite several attempts by AMCON and her solicitors. A recovery suit has since been filed against the obligor at federal high court sitting in Benin, Edo State. The case has been adjourned sine die while a trace is made on any property belonging to the Obligor.



The amount owed is N46, 773, 772. 94 (Forty-six million seven hundred and seventy-three thousand seven hundred and seventy-two-naira ninety-four kobo) only. A recovery suit has been filed against the obligor at federal high court sitting in Lagos State. The suit is still ongoing in court. The judge has requested that a copy of the third party tripartite legal mortgage be submitted to court before the interim order applied can be granted.


(f)   AMCON V. DELCOM SYSTEMS LIMITED SUIT NO. FHC/ASB/CS/9/17: The Managing director is Hon. John Chike Osadebay. The amount owed is #91,808,399.00 (Ninety-One Million Eight. Recovery suit has since been filed against the obligor at Federal High Court sitting in Asaba Delta State. The Managing Director of the obligor company was confirmed ill and of no financial standing. The case was adjourned sine die to enable the tracing of the assets of the obligor.  


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Lessons & Key Takeaways


One of the major lessons learnt from an examination of cases handled is that litigation is often not the best way to recover debts. As most of the cases reviewed show, the process of litigation is often rife with delays and stumbling blocks both real and manufactured by defense counsel in a bid to delay the liquidation of assets of defaulters.

Judges may sometimes struggle to balance the need to administer justice and do it right, which may take time, with the speed required in the business environment due to the time value of money. Often, debtors who clearly have no answer to their liability explore the litigation route by going first to court in order to frustrate a legitimate recovery process and forestall the realization of the assets deposited as collateral securities. A discerning judge with knowledge of the intricacies of financial transactions would be able to see through the exploitation of the judicial process by this debtor. Thus, continued training for judges on financial issues like securitization and secured credit transactions, combined with technological innovations to assist court proceedings would play a crucial role in keeping up with the intricacies of financial transactions and enable judges adjudicate effectively. 

 Furthermore, it becomes glaring that the process of validating borrowers and loan approval is usually not comprehensive enough with the result that you have a debtor defaulting in more than one bank. Apparently, there needs to be an overhaul of the debt approval, monitoring and recovery processes. Financial institutions need to improve on their internal controls and risk assessment framework underlying their disbursements. Many loans are approved without comprehensive information about the borrower and without valid and adequate collateral. If the loan becomes bad, these fundamental defects in the loan approval process in banks can make the recovery effort much more complicated.

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Related Reports (PDF)

1.      Download the Full PDF Report - Debtors Africa, May 13, 2020

2.     Executive Summary PDF - Proshare, May 14, 2020

3.     AMCON and Financial Services Debt Burden in Nigeria - Aug 17, 2018

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