Post by Esosa Omo-Usoh, FCIArb

Appellate Win - Buying a company's assets is not the same as buying its liabilities. That principle, settled but routinely overlooked in execution proceedings, was reaffirmed by the Court of Appeal, Port Harcourt Division, in Notore Chemical Industries Ltd v. Decrest Nigeria Ltd & Ors (CA/PH/524/2018), delivered on May 12, 2026. The facts: a judgment creditor of the defunct National Fertilizer Company of Nigeria (NAFCON) sought to enforce a 2001 judgment, not against NAFCON, but against our client, which had acquired certain NAFCON assets from the liquidator under an Asset Sale and Purchase Agreement. Garnishee orders were obtained and made absolute against our client's bankers. The trial court reasoned that, having acquired substantially all of NAFCON's assets, the purchaser must equally have taken on its liabilities. The Court of Appeal disagreed. It held that the liabilities of a vendor do not pass to a purchaser of assets unless the agreement expressly says so. The warranties the trial court had relied on were given by the seller, not assumed by the buyer, and the conveyancing clause transferred the assets free of all claims, liens and encumbrances. Absent an express assumption of liability, none could be implied. Three practical points for counsel and transaction parties: First, in an asset purchase, the transfer of liability must be expressly drafted. It cannot be inferred from the sheer breadth of the assets acquired. Second, a garnishee order attaches only a debt owed by the garnishee to the judgment debtor. The identity of the judgment debtor is not a matter to be assumed. Third, the burden rests on the party asserting that one company has absorbed another to prove it by corporate documentation, not by oral testimony on oath. Our firm acted for the successful appellant, with our partner, Henry C. Chibor, FCIArb prosecuting the appeal and supported by our supervising senior associate, Thompson Dede, and associate, Vincent Nnadi.