AMCON Declares It Will Liquidate Arik Air Following the Settlement of Ongoing Legal Issues

Citing the airline’s outstanding debt of about N455 billion, AMCON has said that it will sell Arik Air once its legal issues have been resolved.

The Asset Management Corporation of Nigeria (AMCON) has stated that it will liquidate and sell Arik Air only once it has resolved all of its actions against the airline; otherwise, it would be considered subpubic.

During a media briefing hosted by AMCON on Friday in Lagos, the organization’s spokesperson, Jude Nwauzor, revealed this.

Nwauzor provided information about AMCON’s involvement with the airline, stating that Arik Air owes AMCON N227,637,469,394.34 billion. Additionally, at the end of December 2024, the total debts owed by Joseph Arumemi-Ikhide’s other companies, including Rockson Engineering (N163,502), 837, 397.75 billion, and Ojemai Farms (N14, 031, 457, 980.71 billion), added up to N455, 171, 764, 772.80 billion.

“The debt collection process has been difficult and demanding. AMCON is still up against opposition from few debtors who refuse to pay without a struggle, even if thousands of Nigerians and Nigerian businesses have fulfilled their responsibilities. Sir Johnson Arumemi-Ikhide, the owner of Arik Air Limited (under receivership), is one of these debtors. He is also the promoter of Ojemai Farms Limited, Ojemai Investment Limited, and Rockson Nigeria Limited, a power infrastructure firm.

Due to these enterprises’ non-performance, several banks transferred their obligations to AMCON; as of December 31, 2024, the total amount owed was N455, 171, 764, 772.80 billion. AMCON owes Arik N227,637,469,394.34 billion, while Rockson Engineering owes Ojemai Farms N14, 031, 457, and 980.71 billion, he added.

Nwauzor asserted that the leadership of AMCON is aware that there is no pleasant method to collect debt, and that the debts must be paid back regardless of the purported smear campaign launched against the company by Arumemi-Ikhide.

Nwauzor stated, “Obligors use every tool at their disposal to intimidate and harass our personnel, corrupt the name of AMCON, and assassinate the reputations of both AMCON staff and management.”

“If at sunset AMCON is unable to recover the huge debt of over N4 trillion, it becomes the federal government of Nigeria’s debt, which will be settled with taxpayers’ money,” he said, adding that AMCON’s duty was of national importance. The inference is that the public will be forced to foot the bill for the carelessness of a select few who continue to exploit our legal loopholes to avoid their moral and legal responsibility to pay back their debts.

Johnson Arumemi-Ikhide, the founder of Arik, “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,” according to Nwauzor, who also mentioned a number of other bogus statements. Along with claiming his loan was functioning, he has also accused the receivership of being premature.

“These statements are deceptive. Why was the loan sold and restructured if it was performing? This is a question that the enlightened people must ask. And what made him accept the reorganization?

“Did he carry out the conditions set forth? In compliance with the Central Bank of Nigeria’s (CBN) Prudential Guidelines, Union Bank of Nigeria PLC (UBN) decided to declare the loan non-performing and sell it. Nwauzor said, “Union Bank voluntarily provided the Arik loans to AMCON, which legally bought the debts.

In a letter dated October 22, 2010, he added, Union Bank told Arik that its loans, totaling an astounding $474 million (about N70 billion at the time), were non-performing and threatened the bank’s viability. According to Nwauzor, this loan exposure was a major contributing reason to Union Bank’s financial difficulties.

The fact that Arik’s debts were sold to AMCON via Bank PHB (now Keystone Bank) in addition to Union Bank should not be overlooked. Sir Johnson Arumemi-Ikhide has acknowledged this debt on many occasions. Sir Johnson acknowledged the debt and voluntarily consented to modify the debts when they were purchased. Any challenge to AMCON’s purchase of the NPLs is, in any case, statute-barred, and the AMCON Act contains clauses that show that such a challenge cannot give rise to a legitimate cause of action.

Regardless, AMCON had extensive discussions with Arik’s management from 2011 to 2017 (who never questioned the non-performing loans), but Arik continuously missed payments in spite of many offers of financial accommodations, debt reduction, and restructuring. AMCON was forced to think about several recovery possibilities, according to Nwauzor.

A KPMG report commissioned by AMCON found that Arik was balance-sheet insolvent, with a negative equity value of about N80 billion and total liabilities of N289 billion as of December 31, 2016. He explained that receivership was one of the options because Arik was allegedly plagued by insolvency “and operational paralysis” prior to receivership. The company’s financial situation was catastrophic, he said.

Furthermore, audits for 2015 and 2016 were carried out by PwC Nigeria, the company’s longstanding auditors who were originally hired by Sir Johnson Arumemi-Ikhide. According to these audits, Arik had been declared technically bankrupt since 2014, and its liabilities had surpassed its assets in 2015 and 2016 until the receivership was started in 2017. Arik’s debt to AMCON was almost equal to its negative shareholder capital, which was N139 billion as of December 2016.

“Arik’s operations suffered significant setbacks at this time. Arik encountered several difficulties between November 2016 and January 2017, including as flight cancellations, noncompliance with contractual responsibilities, and a suspension of operations because insurance was not paid. The airline was also involved in lengthy legal battles with the NCAA, FAAN, and NAMA, claiming a total of almost N30 billion, according to the AMCON spokesperson.

There were nine airworthy aircraft in the fleet when AMCON took over in 2017, according to Nwauzor, while eleven were not immediately usable. Of those, 14 were either owned or sold by creditors. As of August 31, 2024, there were thirty aircraft in Arik Air’s inventory and under its control.

The National Assembly has given AMCON the authority to acquire, oversee, and sell assets, including Arik Air’s, Nwauzor further claimed. Additionally, it gives AMCON the authority to designate a receiver or receiver manager, distribute assets of a bankrupt firm, such as Arik Air, and explain why it had not yet done so in order to preserve the capacity of the domestic aviation industry and save the jobs of thousands of Nigerians.

Nwauzor did not, however, specify how much AMCON has improved the company’s income, profitability, or aircraft fleet since acquiring it on February 9, 2017, but he did emphasize that it has improved the organization’s staff, which has decreased from about 3,000 to fewer than 1,500.