Legal Aspects of Structured Finance: Prospects & Challenges for Nigeria

Abstract

The bid of businesses to stay afloat in the unsure waters of solvency; to guarantee capital adequacy while not neglecting the demands of liquidity; to quell shareholder dissatisfaction with profitable returns on capital and to generally maintain a profitable organization has demanded that corporate managers devise schemes that aim at ensuring two objectives: the real viability of the business at balance sheet value and the adequate projection of the business in the market for corporate control. The “reconfiguration” of credits or receivables either in the form of credit derivatives or securitization has come to be appreciated as the presently defined dimensions of structured finance. The commercial relationships which these concepts and practices give rise to are such that should derive validity from the diverse aspects of commercial law. Nomenclature will essentially not serve any purpose for the law, as indeed, these relationships defy any traditional classification of commercial law. The bid to have the Nigerian legal system appreciate the complexities, yet dynamism of structured finance is what this work is about. Indeed, from its standpoint of a general overview of what constitutes structured finance to the essentialities of the legal issues involved therein, the work attempts to lay the requisite foundation for more detailed discussions on the prospects of structured finance in Nigeria.