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Uncertainty for Cytonn investors as court appoints administrator

BUSINESS
By Kamau Muthoni | October 9th 2021

An architectural photo of the Sh6 billion The Ridge by Cytonn Investments. [Courtesy]

The High Court has appointed an administrator for two struggling Cytonn Group Investment funds.

Justice Alfred Mabeya appointed Kereto Marima to manage properties of Cytonn High Yields Solutions (CHYS) LLP and Cytonn Real Estate Project Notes LLP after the company’s Chief Executive Edwin Dande moved to court, seeking to have the funds managed by an administrator.

“This court do hereby appoints Kereto Marima... a licensed insolvency practitioner as an administrator of the property of Cytonn High Yields Solutions LLP in accordance with the provisions of the insolvency act,” Justice Mabeya said.

Cytonn said it acted following a resolution by the CHYS investors’ board that decided to put the funds under administration instead of liquidating them. 

The firm said Covid-19, regulatory attacks and bad publicity were the cause of the funds falling into liquidity strain.

Following the orders, Marima will manage the funds in a bid to return the products to profitability and recover investors’ funds.

However, if the funds cannot be redeemed, the administrator can recommend liquidation.

Cytonn Investments CEO Edwin Dande. [David Njaaga, Standard]

Cytonn is embroiled in disputes with creditors where billions of shillings are at stake.

One of them, Taaleri Afrikka Rahasto II KY, a Mauritius-based company, is claiming Sh3.016 billion from Cytonn Investments Partners Eleven LLP.

The firm wants Cytonn to either deposit a guarantee in court or have accounts of The Ridge, Cytonn Towers, Applewood, Riverrun and Taraji projects frozen.

Taaleri, in court documents filed by Cecil Miller and Company Advocates, says it loaned Cytonn Sh2.7 billion on June 6, 2018.

It says they agreed to have a partnership, with a property at Ridgeways as security and to hold all the money received.

By June 2020, the firm says, Cytonn owed it Sh3.016 billion while 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,” the papers filed before the Commercial Court say.

But Cytonn accuses Taaleri of coming to court with unclean hands, and telling the court half-truths and outright fabrications.

Cytonn Manager Patricia Wanjama, in reply, says that contrary to the creditor’s claim, Cytonn is owned and managed by Kenyans save for two foreign board members who represent Taaleri.

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