Troubled Cytonn Investments face shutdown after court orders liquidation to recover Sh14billion investors’ money
Cytonn Investments is dealing a huge blow after the High Court ordered the liquidation of two of its investment arms to recover over Sh14 billion owed to 4,000 investors.
Justice Alfred Mabeya ordered the liquidation of the two investment arms; Cytonn High Yield Solutions and Cytonn Real Estate Project Notes.
He also ordered for the preservation of the company’s assets and housing projects identified as ‘the Alma Applewood/Miotoni, Riverrun, Ridge and Taraji until the liquidation is concluded.
The judge noted that over 3,000 investors had put in excess of Sh11billion in Cytonn High Yield Solutions (CHYS) and 886 others over Sh4billion in the Cytton Real Estate Project notes
“There is evidence on record that the monies paid by the creditors of CHYS and CPN was sank in these projects and all that CHYS and CPN has in possession are mere pieces of paper called Loan Notes. There are no securities held by way of charges for what the investors sank in CHYS and CPN, who in turn sunk the same into these projects,” Justice Mabeya ruled.
He also noted that there is no possibility of turning the company around to enable it sort out the anxious investors and creditors.
The company has been blaming its predicaments on Covid-19 and has asked investors for more time to reorganise its business.
According to court documents, the total clients’ liability for the two investment arms as at August 31,2021 was Sh14billion.
According to a court appointed administrator, Kereto Marima, there is insufficient assets to settle the liabilities because all he had in his possession were loan notes that has been unable to enforce.
Marima asked the court to extend the administration period for a further one year saying the process was yet to achieve its purpose.
However, investors were opposed to the bid and were pushing for the liquidation.
Justice Mabeya said that a request by the creditors for termination of the administration process and preservation of the assets merited.
“The Administration of Cytonn High Yield Solutions (CHYS) and Cytonn Real Estate Project Notes (CPN) is hereby terminated and is placed under liquidation,” Justice Mabeya said.
The court also appointed an official receiver following a finding that Marima had connections to promoters of CPN and CHYS.
“The administrator to forthwith surrender to the official receiver all the properties and belongings of CHYS and CPN as well as all the administration documents,” said Justice Mabeya.
Last year, the Cytonn Real Estate Project Notes were sued by three businessmen over Sh.46.7 million investment money.
The businessmen demanded the court to order Cytonn to pay them the said amount for allegedly violating the consumer rights.
The trio claimed that they invested with Cytonn High Yield a sum of Sh30 million at an agreed interest rate of 18 percent payable monthly for a period of 12 months.
They claimed that Cytonn representatives told them they would receive handsome monthly returns if they invested substantial amounts of money with them.
