Legal And Accounting Implications Of Bankruptcy To Businesses In Nigeria

Given the current wave of gross inability to meet financial obligations by many business owners, this paper examines the legal and accounting implications of insolvency (leading to bankruptcy) to businesses and its developmental contribution to Nigeria’s burgeoning economy. We employed a desk review, exploring the different meanings, implications and consequences of bankruptcy and its applications from literature sources. Literature sources include academic and newspaper publications as well as other relevant articles and internet sources. We find that statutory bankruptcy provisions as well as institutional support for bankruptcy proceedings may still be inadequate to respond to these peculiar times as culture plays its own role. Unfortunately, we could hardly get information on bankruptcy proceedings in Nigeria, which testifies to its suboptimality as an effective debt recovery mechanism. In addition, the difficulty in ascertaining which debtor is trying to sabotage the efforts of their creditors is a significant challenge. Creditors on the other hand are mostly averse to initiating a bankruptcy proceeding due to traditional and socio-cultural concerns. This paper reports the consequence of insolvency leading to Bankruptcy and its implication to business development in Nigeria from the legal and accounting eyes.