CORPORATE RESCUE MODELS IN THE UNITED KINGDOM AND THE UNITED STATES: A COMPARATIVE STUDY WITH NIGERIA

Abstract

The trend in modern insolvency practice is to give companies in financial difficulty opportunity to be rescued instead of going into liquidation. Many countries have developed their own Corporate Rescue Model to provide for measures to save companies that, though in financial difficulty, are still viable. At the forefront of this rescue is United Kingdom and United States. Whereas United Kingdom run the Debtor-in-Possession rescue model, which is a creditor friendly model, United states run Administrative order rescue model, which is a debtor friendly model. In the modern legal regime for corporate insolvency there are two basic routes which can be followed in dealing with an ailing company; it is either liquidation or corporate rescue. Both Liquidation and corporate rescue provide a collective way of settling the fate of an ailing company. Yet, they both have different implications, whereas, liquidation serves the basic purpose of winding up an ailing company through an orderly collection and realisation of the company’s assets, the net value of which is distributed among claimants according to a statutory system of priorities. Corporate rescue on the other hand, provide an alternative to the immediate liquidation of the ailing company, by putting together measures to rehabilitate and restructure the ailing company. The aim of the article is to compare the US and UK corporate rescue models, with the intention of learning from their rescue practise, to improve the Nigerian’s rescue practise.