… Airline’s Pre-Receivership Was Plagued By Insolvency, Operational Paralysis
…Says Only Eight Aircraft Were Operational Out Of 30 On Receivership
The Asset Management Company of Nigeria (AMCON) has disclosed that Arik Air, a local airline owned by Sir Johnson Arumemi-Ikhide, that was placed under its Receivership in 2017 is indebted to AMCON to the tune of N455, 171, 764, 772.80 billion as at December 31, 2024.
According to AMCON Arumemi-Ikhide,is also the promoter of Rockson Nigeria Limited (a power infrastructure company), Ojeimai Farms Limited, and Ojemai Investment Limited.
Explaining further, AMCON revealed that these companies’ debts were transferred by various banks to AMCON due to their non-performance, with a total indebtedness of N455, 171, 764, 772.80 billion as at December 31, 2024.
Giving a breakdown, it explained that Arik owes AMCON N227,637,469,394.34 billion, Rockson Engineering N163,502, 837, 397.75 billion and Ojemai Farms N14, 031, 457, 980.71 billion.
It pointed out that the fact of the matter matter is that no matter the smear campaign Arumemi-Ikhide is sponsoring against AMCON, these debts must be recovered one way or the other, adding that the leadership of AMCON knows that there is no nice way of recovering debt.
“For that, obligors go to any length to assassinate the characters of both AMCON staff and Management, they malign the name of AMCON, intimidate, and harass our personnel with every arsenal at their disposal,’ AMCON alleged.
AMCON said that it has repeatedly made the point at every opportunity that all stakeholders including the Aviation Media must view the AMCON mandate as one of serious national importance, adding that if at sunset AMCON is unable to recover the huge debt of over N4 trillion, it becomes the debt of the Federal Government of Nigeria for which taxpayers’ monies will be used to settle.
AMCON stated that the implication is that the general public will be made to pay for the recklessness of only a few individuals who continue to take advantage of the loopholes in Nigeria’s laws to escape their moral and legal obligations to repay their debts.
AMCON appealed to the media to ask Sir Johnson Arumemi-Ikide if indeed he took these loans that led the banks to sell the loans to AMCON and that If his answer is yes, the aviation media should also be interested in his effort(s) at repayment.
On Arik Air Limited’s indebtedness, under the management of Sir Johnson
Arumemi-Ikhide, AMCON said that the owner of Arik Air , that is under Receivership has consistently peddled a false narrative regarding his debt to AMCON, claiming that Arik never defaulted in its payment obligations to Union Bank and feigning ignorance of the debt owed to AMCON.
Reacting to Arumemi-Ikhide’s allegations that the receivership was premature and his loan was performing, AMCON pointed out that Arumemi-Ikhide’s claims are misleading and that the question the public must ask is “if the loan was performing, why was it sold and restructured? And why did he agree to the restructuring? Did he fulfill the agreed terms?
AMCON revealed that the decision to classify the loan as non-performing and to sell it was made by Union Bank of Nigeria PLC (UBN), in accordance with the Prudential Guidelines set by the Central Bank of Nigeria (CBN).
Union Bank, AMCON said willingly offered the Arik loans to AMCON, which purchased the loans in compliance with the law, adding that in a letter dated October 22, 2010, UBN informed Arik that its loans, which amounted to a staggering $474 million (approximately ₦70 billion at the time), were non-performing and posed a threat to the bank’s stability.
AMCON said that this loan exposure was a significant factor in Union Bank’s financial challenges.
,”It is important to note that beyond Union Bank, Arik’s loans were also sold to AMCON by Bank PHB (now Keystone Bank), and Sir Johnson Arumemi-Ikhide has, on several occasions, admitted to this indebtedness. Following the purchase of the loans, Sir Johnson willingly agreed to restructure the loans, acknowledging the debt. In any event, any challenge of the purchase of the NPLs by AMCON is statute-barred and there are provisions within the AMCON Act demonstrating that there is no valid cause of action that may arise from such a challenge.In any event, from 2011 to 2017, AMCON engaged in prolonged negotiations with Arik’s management (who never questioned the NPLs), but despite several financial accommodations, debt reduction offers, and restructuring efforts, Arik consistently defaulted on its obligations.
AMCON was left with no choice but to consider various recovery options,” it said.
On why the Receivership, AMCON said pre-receivership, Arik was plagued by insolvency and operational paralysis and that the company’s financial condition was catastrophic.
AMCON stated that a KPMG report commissioned by it revealed that Arik was balance-sheet insolvent, with a negative equity value of approximately ₦80 billion and total liabilities amounting to ₦289 billion as of December 31, 2016.
AMCON added that PwC Nigeria, the company’s long-standing auditors (previously appointed by Sir Johnson Arumemi-Ikhide), conducted audits for the years 2015 and 2016 and that these audits confirmed that Arik had been technically insolvent since 2014, with its liabilities exceeding its assets throughout 2015 and 2016, up until the commencement of the receivership in 2017.
According to AMCON, “As of December 2016, Arik’s negative shareholder capital stood at ₦139 billion, nearly equivalent to its debt to AMCON.”
It continued, “During this period, Arik’s operations were severely compromised. Between November 2016 and January 2017, Arik faced numerous challenges, including the cancellation of flights, inability to fulfill ticketed obligations, and a suspension of operations due to failure to pay for insurance. The airline was also engaged in protracted disputes with NCAA, FAAN, and NAMA, with combined claims of about ₦30 billion.The government, concerned about the safety of the airline, the welfare of over 1,500 employees, and the stability of the aviation industry urged AMCON to intervene. As a result, AMCON appointed a Receiver-Manager in compliance with the AMCON Act to stabilize the operations of Arik.Court Affirmation of the ReceivershipIt is vital to clarify that the validity of the receivership has been affirmed by the court and is not in question. In Suit No. FHC/L/CS/1175/2021, between Johnson Arumemi-Ikhide & Anor v. Kamilu Alaba Omokide & Ors, the Federal High Court, Lagos Division, presided over by Hon. Justice A. Lewis-Allagoa, affirmed the validity of the receivership. The court upheld the exclusive authority of the Receiver-Manager to manage the affairs of Arik.”
On the state of affairs at the commencement of Receivership, AMCON explained, “When the Receivership Team took over Arik, the company was financially stranded and facing imminent shutdown. The airline had no adequate cash reserves, and its operations were near collapse. Critical maintenance was overdue, many planes were grounded, and the company owed substantial sums to various service providers, including Maintenance Repair Organizations (MROs), who had withdrawn their services.
” Arik’s on-time performance (OTP) was below 40%, with many flights being cancelled due to inadequate working capital.The staffing issues were severe, with employees going unpaid for months and critical training suspended due to lack of funds. Insurance policies had expired, and the company was heavily indebted to multiple service providers, including federal aviation agencies and international operators.”
On the claim by Arumemi-Ikhide of the mismanagement of Arik’s fleet under the receivership, AMCON explained that, “on the contrary, upon taking over the company, the Receivership Team found a fleet in disarray, with only eight operational aircraft (as against the inaccurate 30 being bandied about), many of which required urgent maintenance. Some of the planes had been used as collateral for Sir Johnson’s personal debts, leading to repossession by creditors.”
Commenting on the issue of the charge filed by the Economic and Financial Crime Commission(EFCC) in relation to Arik’s issues, attempting to suggest that this absolves Arumemi-Ikhide of his indebtedness to Corporation, AMCON. Posited that the existence of a criminal charge does not detract from his obligations.
According to AMCON, “No determination of criminality has been made in these matters, and AMCON remains resolute in its efforts to recover the debts owed by Arik and its shareholders.”
“Sir Johnson’s refusal to settle the debts owed is a disservice to the commonwealth and the Nigerian people,” it added.
AMCON assured the public that while the recovery process may take
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