When Liquidation is not an option: A Global Study on the Treatment of Local Public Entities in Distress (A Critical Analysis of the Nigerian Approach)

The treatment of local public entities (i.e., local government authorities or ‘LPE’) in distress is a severely under-researched area in many jurisdictions. Often, the issue of LPEs in financial distress is addressed domestically under administrative and insolvency laws with insufficient guidelines on why and how LPEs may suffer financial distress and the impact on the economy and livelihood of its citizens. This article represents a national report of Nigeria to provide informed recommendations for an internationally coordinated and harmonised treatment of LPEs in distress globally. We study the significance of financial distress faced by its LPEs in Nigeria and the socioeconomic importance of the continuity of essential services dependent on LPEs. The article outlines key insolvency principles that must be protected, including recognising creditors’ rights, and strategic recommendations that lawmakers should consider when implementing a national framework through best practice reform.