According to reports the High Court of Kenya has ordered that the projects owned by Cytonn Real Estate should be liquidated. With the news it is believed that the liquidation of said properties will aid in the recovery of the more than 14 billion Kenyan Shillings that the Real Estate company owes its 4,000 investors.
Justice Alfred Mabeya added that Cytonn Real Estate’s housing projects and assets which are identified as Taraji, Ridge, Riverrun, Miotoni/Applewood, and the Alma should be preserved until the liquidation has been concluded.
The High Court stated that over 3,000 individuals invested more than 11 billion Kenyan Shillings through the Real Estate firm’s Cytonn High Yield Solutions (CHYS) while 886 others had invested over 4 billion Kenyan Shillings in Cytonn Real Estate’s Project Notes (CPN).
In the words of Justice Alfred Mabeya, “The court must be sensitive and alive to the plight of over 3,000 members of the public who sank their over Sh11 billion and 886 others whose over Sh4 billion was sunk into these projects and therefore lean towards a lesser evil, which is to preserve those assets for the time being.”
Read Also: Import and Export Gap For Kenya Now Over 1.37 Trillion Kenyan Shillings
The new ruling by the High Court now makes it possible for a number of properties owned by Cytonn Real Estate to be sold and the liquidity created through said sales, channeled towards the reimbursement of all the investors who have had to wait for over five (5) years for returns on their billions of Kenyan Shillings worth of investments.
Justice Alfred Mabeya while refusing to further extend the continued administration of Cytonn Real Estate for said assets, made it known that it was not possible for the current financial situation of the firm to change as it had confirmed that the company currently has no source of funding that is credible.
In the judgement delivered Justice Alfred Mabeya stated that, “It is not in dispute that Cytonn Real Estate Project Notes (CPN) is seriously ailing and the Creditors have suffered and continue to suffer as CPN is unable to pay what it owes them. The Court is therefore of the view that the viable option would be to liquidate the company and to appoint a Liquidator who will have the interests of the Creditors at heart.”
Read Also: IBL Group Sets Sights On More Acquisitions In East Africa
Cytonn Real Estate had in 2021, requested to be placed under administration making it known, that it had received capital from 886 investors that amounted to 4,180,992,923 billion Kenyan Shillings.
The Court then granted the Administration Order and Kereto Marima who had been proposed by the Directors of the Cytonn Real Estate Project Notes (CPN) was appointed as the Administrator.
In an application made in 2022 however, the creditors of the Cytonn Real Estate Project Notes (CPN) asked the Court to terminate and remove Cytonn Real Estate’s Administration Order.
Read Also: Baseline Architects Limited Stopped From Pursuing 1.4 Billion Kenyan Shillings From NHIF
It was alleged by the Creditors that the Administrator; Kereto Marima had failed to carry out anything tangible during the administration process. The Creditors added that the Administrator had not informed the Court that he was affiliated with the Cytonn Real Estate Project Notes (CPN) as he had engaged in business with the entity just two (2) months before being appointed as the Administrator.
The Creditors also wanted the Court to step in with regards to the preservation of a number of projects which were the Cytonn Integrated Project LLP, the Cytonn Investments Partners 18 LLP, the Cytonn Investments Partners Five LLP, the Cytonn Partners Eleven LLP and the Cytonn Investments Partners 10 LLP.
The Creditors believed that the management of Cytonn Real Estate Project Notes (CPN) still had control of the company even though the Administration Order from the Court out in place. Cytonn Real Estate Project Notes (CPN) continued to convert while also advertising the sale of a number of its assets.
Read Also: Peer-To-Peer Network Cashlink Is Now On Binance
Through an affidavit sworn by Edwin Dande Cytonn Real Estate asserted that the Special Purpose Vehicles (SPVs) were all separate legal entities from Cytonn Real Estate and as a result, were not under its administration.
Cytonn Real Estate also made it known that it was owed over 3 billion Kenyan Shillings by all five Special Purpose Vehicles (SPVs).
According to Cytonn Real Estate it is simply a collection point that received the funds raised by investors and then the Special Purpose Vehicles (SPVs) borrow from said funds via Loan Notes.
The Real Estate company stated that the Special Purpose Vehicles (SPVs) were being unfairly confronted. The Creditors in response, argued that the Directors of Cytonn Real Estate are still very much in charge of the Special Purpose Vehicles (SPVs).
The Adminstrator; Kereto Marima while opposing the claims made by the creditors revealed that the only assets that owned by the Cytonn Real Estate Project Notes (CPN), were the loan notes. He added that he had made unsuccessful attempts to get the repayment of the loan notes from the Special Purpose Vehicles (SPVs).
Read Also: Safaricom Slashes Rates For Monthly Bundle Packages
The Administrator went on to State that his Statement of Proposal had revealed that Cytonn Real Estate Project Notes (CPN) did not have any funding strategy that was reliable. As a result, Cytonn Investment Management Plc which is its main partner, moved to slow down on the fund.
Justice Alfred Mabeya discovered that the Administrator did not inform the Creditors that the assets owned by Cytonn Real Estate Project Notes (CPN) were controlled by him as well as what he had done with regards to protecting the interests of said Creditors.
According to Justice Alfred Mabeya, “The Administration of Cytonn High Yield Solutions (CHYS) and Cytonn Real Estate Project Notes (CPN) is hereby terminated and is placed under liquidation.”
Read Also: Bank M-Pesa Fees Are Back Thanks To CBK
Upon discovering that Mr. Marima had connections to the promoters of Cytonn High Yield Solutions (CHYS) and Cytonn Real Estate’s Project Notes (CPN) to the disservice of the Creditors, the Court appointed an official receiver as the Liquidator of the company.
The Court recognized that despite the administration order which was put in place, Cytonn Real Estate’s Project Notes (CPN) was still under the administration of its Directors.
According to the Court, “It is, therefore, no wonder that even after the Administration order, Edwin Harold Dayan Dande, who describes himself as the Chief Executive Officer of CIMP is the one swearing and filing affidavits.”
Read Also: Kenya Set To Allow Duty-Free GMO Maize Imports For Six Months
The Court disproved claims made by Cytonn Real Estate that the Special Purpose Vehicles (SPVs) were separate entities and made it known that the projects were being controlled by Cytonn Properties.
In the words of the Court, “It may be that the said entities are separate and independent of the CPN but not the projects. All of them are CYTONNS.”
Entrepreneurs and retirees were among the Creditors affected with a number of them opting to sue, while others lodged formal petitions at the National Assembly over worries that their funds could be lost.
Read Also: Neuralink Set To Begin Human Trials For Brain Chips In 6 Months
Justice Alfred Mabeya also ordered that all other legal proceeding against Cytonn must be put on hold so as to wait for the liquidation and for the claims to be brought forward and proven before the Liquidator.
Projects in Cytonn’s portfolio include housing units in gated communities situated at a number of high end districts like Karen and targeted clients it believed could purchase said housing units off plan.
How informative was this particular article? Are there any other news topics, categories, or How To topics, that you would like us to write on? Feel free to reach out to Nexbit KE in the comment section.
