Cytonn Investments is dealing with a blow after creditors moved to court to demand their money where billions of shillings are at stake.
Taaleri Afrikka Rahasto II KY, a Mauritius-based company is claiming Sh3.016 billion from Kenya’s Cytonn Investments Partners Eleven LLP.
Taaleri firm claims that by June 2020, Cytonn owed it a Sh3.016 billion and that foreigners who have no known security in Kenya own Cytonn.
“It has come to the attention of the plaintiff that the defendant is facing imminent insolvency and as a matter of fact, there are a number of claims against the defendant pending before the court, which claims are related to the defendant’s inability to meet its financial obligations,” read the petition filed before the Commercial Court.
In December last year, the firm sued Cytonn and accused the firm of intentionally defaulting the loan.
Cytonn received funding from Taaleri firm as it was restructing the TT Africa debt.
The firm disbursed Sh2.1 billion loan to Cytonn, which planned to use the funds to construct the Ridge.
According to the firm, the two agreed to have a partnership, with the Ridgeways property as security and to hold all the monies received.
However, Cytonn accuses Taaleri of telling the court half-truths and outright fabrications.
Patricia Njeri Wanjama, Cytonn’s manager, says that contrary to Taaleri’s claim, the firm is owned and managed by Kenyans save for two foreign board members who represent Taaleri.
According to her, the agreement was that in the event of a default, the lender was at liberty to sell its stake in the partnership or any part of it and the new entrant would become the new partner.
She says Taaleri did not utilise that clause before filing the court case.
According to her, the plaintiff’s investment in the defendant is backed by the charge, wherein the security is on the partnership’s custody account and to note, the power of sale is over the security identified and which exercise of the power of sale the plaintiff has not begun to exercise.
The land purchase was financed by Cytonn High Yield Solutions(CHYS) and Cytonn Investments Partners Eleven LLP (CPN) and Taaleri funds were to be channelled to construction.
Wanjama says that Taaleri investments are in The Ridge, intact and waiting for a better business environment.
Cytonn blames the stalled projects that started on April 17, 2018 on Covid-19 pandemic.
Taaleri wants the High Court to allow it take over ownership of the Ridge, a move that may give the firm an opportunity to auction the property.
The firm sued Cytonn after CHYS investors started fighting to withdraw their investment money.
While the investment firm argues that Covid-19 has affected their liquidation, not refunding money to their investors after extension of maturity lapses highlights the souring relations between the firm and investors over the past year.
However, some investors claim that long before Covid-19, the investment had liquidity challenges and was already in breach of many disputes.
Cytonn invoked a greater force extending the maturity date of two of its real estate funds – the Cytonn High Yield Solutions (CHYS) and the Cytonn Project Notes – to June this year.
The Capital Markets Authority (CMA) last month confirmed that Cytonn Investments is not a licensed and approved entity and thus operating illegally.
In a statement, CMA Chief Executive, Wyckliffe Shamiah stated that investors who are affected by investing in unregulated products should report to the Capital Markets Fraud Investigation Unit (CMFIU), which is the Police Unit attached to the CMA.
Shamiah stated that CMFIU has instituted criminal probe against the self-styled real estate outfit.
