Nestoil Faces $1 Billion Debt Scandal as Banks place firm under receivership

In a dramatic turn of events that has shaken Nigeria’s corporate and oil industry, police have sealed off the Lagos headquarters of Nestoil Limited, one of the country’s leading oil and gas service companies. This comes after a federal high court order placed the firm under receivership over an alleged $1 billion debt owed to a consortium of banks.

The development, which broke on October 22, 2025, has left industry watchers both stunned and intrigued, as it involves a company long regarded as one of the Nigerian oil sector’s success stories, and one of the most influential indigenous players.

According to reports, the Federal High Court in Lagos, presided over by Justice D. I. Dipeolu, issued a Mareva injunction, a legal freeze that prevents a defendant from disposing of assets, in favor of First Trustees and FBNQuest Merchant Bank, subsidiaries of First Bank of Nigeria Holdings. The injunction empowers the banks to take over Nestoil’s assets, pending the resolution of a larger commercial dispute set to be heard in November 2025.

The court also ordered a freeze on funds totaling $1,012,608,386.91 and ₦430,014,064,380.77, the company’s total indebtedness as of September 30, 2025. But it doesn’t end there. The ruling also lists other staggering debts personally guaranteed by Ernest Azudialu-Obiejesi, the billionaire businessman and founder of Nestoil, along with his wife Nnenna Obiejesi. These additional liabilities reportedly include more than ₦366.8 billion, $61.2 million, $152 million, and ₦10.4 billion. In short — the numbers are jaw-dropping.

Nestoil Speaks Out: “We’re Still Operational”

In response to the court order and receivership action, Nestoil Group issued a statement assuring stakeholders that the company remains “fully operational” and that the issue is strictly a commercial matter before the courts. The company emphasized that it is cooperating with all relevant authorities and financial partners to resolve the dispute “in a transparent and responsible manner.” “Constructive discussions are ongoing, and we remain confident that these engagements will result in a fair and lasting resolution,” Nestoil stated.

The company also highlighted that its subsidiaries, projects, and commitments in oil, gas, power, and infrastructure continue without disruption, adding that proactive measures have been put in place to protect employees and sustain operations.

Who Is Ernest Azudialu-Obiejesi?

For those unfamiliar with the name, Ernest Azudialu-Obiejesi isn’t just another businessman. He’s a heavyweight in Nigeria’s energy and construction scene. The Anambra-born tycoon built Nestoil from scratch into one of the most formidable indigenous contractors handling major pipelines, power, and infrastructure projects for the Nigerian National Petroleum Company (NNPC) and international oil firms.

He also heads Neconde Energy Limited, another major player in the oil and gas sector, which, notably, was also named as a defendant in the ongoing case. This makes the situation not only a legal storm but potentially an industry-shaking financial crisis if unresolved.

The oil and gas community has been buzzing with questions since the news broke. How did one of Nigeria’s most successful indigenous firms end up with a $1 billion debt burden? Some analysts suggest that capital intensive projects, high-interest loans, and unpaid government contracts may have contributed to the financial strain. Others believe it may be tied to the broader liquidity challenges in Nigeria’s oil sector, worsened by fluctuating crude prices and policy inconsistencies.

Whatever the cause, the receivership order represents a serious test of corporate governance, financial transparency, and banking discipline in Nigeria’s business environment.

As the court prepares to hear the substantive case in November 2025, several key questions remain unanswered:

Will Nestoil and its founder reach a settlement with the consortium of lenders?
How will the receivership impact ongoing projects, especially those in partnership with the federal government?
And perhaps most importantly, can the company survive this crisis intact?

While Nestoil insists operations are continuing normally, the image of police sealing off its corporate headquarters paints a more dramatic picture, one that signals deep financial distress and a potential restructuring ahead.

This case is more than just a corporate feud; it’s a cautionary tale about debt exposure and risk management in Nigeria’s business landscape. With the naira’s volatility, rising interest rates, and tightening global credit conditions, even the most established firms are not immune to financial shocks. For the banking sector, it’s a bold move, showing that lenders are increasingly willing to use receivership and asset seizure to recover massive debts, no matter how influential the debtor may be.

And for investors, it’s a reminder that corporate stability can vanish overnight when debt obligations spiral out of control. The unfolding Nestoil saga is a mix of high finance, courtroom drama, and corporate resilience.

Whether this ends in a peaceful settlement or a full-blown corporate restructuring remains to be seen. But one thing is certain, Nigeria’s business community is watching closely, and the ripple effects will be felt across the oil and financial sectors.

For now, Nestoil’s message is clear: “We’re not down, just navigating a storm.”

But storms of this magnitude often redefine the landscape when they pass.