Secured Transactions: Intersections with Bankruptcy and Consumer Protection Laws

Abstract

This chapter discusses two main issues—first, the interface between secured transactions law and bankruptcy law and the problematic issues arising from their intersections. In essence, it analyzes the effects of bankruptcy petition of a debtor on the security interests of secured creditors vis-a-vis the debtor’s property, including issues of hierarchy between secured creditors and other creditors. While the US and Canada have more developed and harmonious regimes between their secured transactions and bankruptcy laws, Nigeria does not yet have that—its secured transactions law is both outdated and compartmentalized and is not in harmony with the bankruptcy statutes; this poses a number of problems, including those already solved by the US Butner principle, the lack of which could eventually stifle credit lending in Nigeria. Thus, in arguing that Nigeria’s secured transactions legal framework and bankruptcy laws be harmonized, the chapter utilizes the US Bankruptcy Code 1978 and the Canadian Bankruptcy and Insolvency Act 1985 as benchmark laws, sources of inspiration, and tools for analysis.