Nestoil and Owners Face Setback as Appeal Court Dismisses Their Legal Representatives

On Friday, there was no reprieve for oil services company

Nestoil Limited, its affiliate Neconde Energy Limited, and their principal owners, Ernest Azudialu-Obiejesi and his spouse, as the Court of Appeal disqualified their attorneys in the high-stakes debt recovery litigation involving a group of banks.

In its decision, the Court of Appeal prohibited Wole Olanipekun (SAN), Muiz Banire (SAN), and other attorneys connected with them from further representing Neconde Energy Limited and Nestoil Limited in this case.

The court ruled that the board of directors led by Ernest Azudialu-Obiejesi did not have the legal authority to appoint counsel due to the fact that they had been stripped of such powers following the appointment of a Receiver/Manager over the companies.

As a result, the ruling favored applications that called for the disqualification of Messrs Olanipekun and Banire, invalidated all motions filed by their respective law firms, and mandated that they stop acting on behalf of the companies in this legal dispute.

This decision comes amid deteriorating financial obligations, with debts estimated to exceed $2 billion owed by Nestoil and its subsidiaries to a collection of lenders.

The appeal court's judgment closely followed a recent directive from the Supreme Court, which previously instructed all involved parties to return to the Court of Appeal to clarify the legal representation question as a preliminary concern.

In a ruling delivered by a five-judge panel led by Justice Inyang Okoro, the Supreme Court instructed the Court of Appeal to determine the competence and authority of the lawyers representing the companies and to report back by January 26, 2026.

Additionally, the Supreme Court cautioned against what it termed frivolous appeals and tactical maneuvers in debt recovery cases, emphasizing that judicial forums should not be exploited to postpone the payment of legitimate debts.

The Court of Appeal's ruling effectively addresses the representation issue highlighted by the Supreme Court and further solidifies the position of the creditors represented by FBNQuest Merchant Bank Limited and First Trustees within ongoing enforcement proceedings.

A banking official remarked that this ruling indicates an increasing judicial intolerance towards attempts by financially distressed entities to obstruct receivership and debt recovery initiatives through procedural strategies, especially in high-value commercial disputes.

With the annulment of their previous legal representation and the nullification of existing court materials, Nestoil and Neconde are now anticipated to regularize their legal representation as per the receivership framework while the case progresses.