An Examination of the Ranking of Secured Creditors in Bank Insolvency in Nigeria

Abstract

Secured creditors rank above unsecured creditors in regular corporate insolvency proceedings. However, the law in Nigeria is silent on the status of bank assets used as collaterals for loans, when insolvency proceedings commence. Therefore, there is uncertainty on whether secured creditors of an insolvent bank should enjoy the same priority that secured creditors have in regular corporate insolvency proceedings. The article examines bank insolvency legislation in Nigeria against best practices to ascertain the status of secured creditors of insolvent banks. It recommends that securities created over banks’ assets should be respected in insolvency, and secured creditors should be given top priority when distribution of the assets of an insolvent bank commences.

Keywords: Secured creditors, Creditor ranking, Bank insolvency, Bank resolution, Priority of claims, Deposit liabilities, Bank depositors.

DOI: 10.7176/JLPG/150-05

Publication date: February 28^th 2026