The Cytonn Creditors Restructuring Committee (CRC) overseeing Cytonn Real Estate portfolio restructuring has resolved to remove the official receiver, citing collusion with Superior Homes, delays and unresponsiveness.
The CRC’s frustration reached a boiling point during a meeting held with creditors, legal representatives, and committee members, where they collectively agreed that the official receiver was hindering progress rather than facilitating it. The committee resolved to pursue a court order for the receiver’s removal and appoint a more efficient insolvency practitioner.
“The official receiver has shown a lack of urgency in addressing this matter,” said Anthony Leshan, the CRC’s legal representative. “We’ve been trying to engage with him since 2023, but nothing has come in writing. We simply cannot wait any longer.”
The core issue revolves around how best to recover the funds poured into Cytonn Real Estate’s projects, which include Superior Homes Kenya, Taraji, Ridge, and Alma, key developments whose completion could significantly impact the creditors’ returns.
Victor Ouma, the CIM representative, outlined the proposed restructuring plan. “The plan has two components: completion of the ongoing projects to add value to them, and the debt settlement plan. In four years, creditors will receive their full amounts, with 20 percent for each of the first three years and 40 percent in the fourth year,” he said.
Ouma emphasized that restructuring would maximize the value of the projects and ensure that creditors recover their investments. “The official receiver, however, seems keen on reducing the value of these projects. We saw this firsthand with the Kilimani destruction,” he added, referencing the controversial destruction of properties in Kilimani, which the CRC believes devalued the investments.
Pastor Ephraim Karangi, Vice Chair of the CRC, also voiced his concerns, particularly for unsecured creditors. “The losers will be the unsecured creditors, who are many, yet their investments are substantial. We met with the official receiver, but we were not satisfied, so we decided to pursue the restructuring path,” he explained.
Official Receiver Under Fire
The committee’s dissatisfaction with the official receiver stems not only from perceived inaction but also from a lack of transparency regarding the sale of assets. One of the most alarming revelations concerned investments in Superior Homes, where the Official Receiver had agreed to sell to Ian Henderson for KES 250 million, a stake valued at KES 1.1 billion by Superior Homes Kenya’s own board of directors. The 77% haircut was not acceptable to creditors. Even more alarming is that once sold to Ian Henderson, the stake was to be flipped to two contestants, Roland Nash the billionaire Managing Partner of VPE Capital in Spain or Britam, at an undisclosed price.
Britam is already in a joint venture with Superior Homes Kenya in a project called Lukenya Plains in Athi River and Roland Nash is also in a joint venture with Superior Homes Kenya in a project dubbed Kanzi Springs in Ruiru.
“Entering into sale agreements without proper valuations and without involving the actual owners of the property is a serious issue,” said Charles, the CRC Chairperson. The committee decried the fact that these transactions were made without their knowledge, compounding their frustrations with the official receiver.
The CRC is now seeking legal recourse to remove the official receiver and streamline the recovery process. Valerie, a CRC committee member, explained that the committee is pursuing an out-of-court settlement but would still require a court order to formally remove the receiver.
“The court cases take forever. We don’t have time. We’ve decided to go through an out-of-court settlement, but we still need a court order for the removal of the official receiver,” Valerie said. “Once that’s done, we’ll appoint another insolvency practitioner who is responsive and swift.”
The legal team also revealed that they had sought the intervention of the former Attorney General before he was replaced, and they plan to engage with the new one. “Seeking an audience with the Attorney General is crucial, as the official receiver reports to that office,” said a legal representative at the meeting.
The CRC is keen to avoid liquidation, a process that they believe would significantly reduce the value of the investments. “Restructuring will bring back 100 percent of the value, while liquidation will only bring back 14 percent,” said Leshan.
Charles Wambua, the CRC Chairperson, highlighted that the committee had consulted extensively with lawyers and confirmed that creditors have the legal mandate to speak in court about their investments. “We, as creditors, have the power to convene and remove the official receiver if he’s not working in our best interests. We’ll soon come together to vote on this matter,” he announced.
The CRC’s legal representatives noted that the courts have been slow to act due to a backlog of cases and a shortage of judges. This has further compounded frustrations among the creditors, who feel that the legal process is dragging out unnecessarily.
Valerie concluded the meeting with a positive note about the projects themselves. “We went to all the projects by Cytonn, asked questions, and we were satisfied with what we saw. We were provided with certified financials. The money is not lost; we just need to get out of this legal battle.”
