Cytonn Investments has accused the Official Receiver (OR) of spreading disinformation concerning the liquidation of two Cytonn-managed funds—Cytonn High Yield Solutions (CHYS) and Cytonn Project Notes (CPN). In a meeting held on Monday evening, Cytonn CEO Edwin Dande and his team addressed claims made by the OR in a previous briefing. The Cytonn team clarified that only CHYS and CPN are subject to liquidation, not Cytonn Investments as a company, and asserted that the OR has misled clients about the status of these funds.
Dande began by refuting allegations that Cytonn had been uncooperative in the liquidation process. “We have not been asked for anything that we have not provided,” he explained, adding that Cytonn had faced difficulties engaging with the OR. Dande referenced an incident from March 13, 2024, where Cytonn staff were asked to leave a key OR meeting. “Cytonn staff were actually chased away from the OR meeting and told they should not be part of the process,” he said, arguing that the OR had made it difficult for the company to participate in critical discussions about the liquidation.
A major point of contention during the meeting was the OR’s description of creditors linked to CHYS and CPN. Dande clarified that two secured creditors—SBM and KCB—had security interests in the Alma and Cysuites properties, respectively, as part of their lending agreements with Cytonn. “The two creditors are SBM and KCB, secured through registered property that includes the Alma and Cysuites,” Dande explained. Additionally, the regulated Cytonn High Yield Fund (CHYF) also has a registered security interest, which the OR’s statements allegedly failed to fully address.
The OR also made claims that Cytonn had hired armed goons to intimidate officials at its Kilimani office, an accusation Cytonn’s legal team was quick to reject. Celestine Koile, a partner at Mali Advocates, which represents Cytonn, explained that the Kilimani office was a registered address for multiple entities, including her law firm. “Kilimani is a registered address for various entities, including Mali Advocates—a law firm,” Koile said. She recounted an incident where the OR arrived at the Cytonn Square property in unmarked vehicles, accompanied by armed men. “We have footage and photos to prove this,” she said, emphasizing that the OR had resorted to intimidation tactics. No report of the alleged confrontation was made to the Kilimani OCS, according to Koile.
Adamskey Dudi, another member of Cytonn’s legal team, expressed concern that the OR had not mentioned the armed incident in any court filings. “The OR has weirdly yet to mention this in court. This is a serious allegation, and we will take action against the OR, as we have been mentioned as individuals,” he stated. Edwin Dande, Celestine Koile and Adamskey Dudi have resolved to sue the OR for defamation.
The Cytonn team also criticized the OR’s suggestion that the Kilimani property could be leased to generate funds for paying security guards and other creditors. Adamskey pointed out that there are court orders in place preventing such action. “The OR cannot lease the property as there are preservation and stay orders for Kilimani,” he said, warning that any attempt to lease the property would amount to contempt of court and attract appropriate legal action.
In another instance of disinformation, the OR reportedly suggested that provisional titles could be issued for Cytonn properties as part of the liquidation process. However, Cytonn’s legal team dismissed this approach as an improper shortcut. “There is a process to be followed to get provisional titles, which includes a gazette notice for lost titles, something the OR has not done,” Koile explained. She urged clients to remain cautious, noting that the OR was attempting to bypass standard procedures to appear as though progress was being made. Koile also reassured clients that RiverRun Estate, one of Cytonn’s real estate assets, was secure, with legal restrictions filed on its title deed to prevent unauthorized actions. “RiverRun has moved to file restrictions on its title deed, so nothing can be done to it,” she said.
Throughout the meeting, Cytonn also provided updates on its real estate projects, many of which remain operational and outside the scope of the CHYS and CPN liquidation. Joseph Muriithi, Real Estate Research Analyst at Cytonn, shared progress reports on developments such as The Alma, The Ridge, and Taraji Heights. Despite challenges posed by the COVID-19 pandemic and the ongoing liquidation, Cytonn remains focused on completing its projects and delivering value to its creditors and investors.
The liquidation process, however, is raising concerns over the value that clients may ultimately recover. Grace Weru, Principal Officer at Cytonn, warned that liquidation could result in reduced returns for creditors. “Liquidation is actually a long process, and clients might not get the ultimate value. Looking at history, we see what liquidation has done to companies,” Weru said, referencing a recent court ruling in the TransCentury case. She cautioned that liquidation often benefits secured creditors at the expense of others, particularly in cases where assets are undervalued or disposed of hastily.
In outlining the company’s strategy to protect the interests of its clients, Dande called for the removal of the OR from the liquidation process. “The CRC, which is the committee supporting the restructuring, has sought an insolvency practitioner, and the next course of action is to remove the OR and move on,” Dande said. He emphasized that the longer the OR remains in control, the more legal challenges Cytonn will face. “There are so many procedural issues that we need to counter to protect the client,” he stressed.
Dande and his team also voiced frustration over the OR’s failure to disclose key details about the liquidation, including the value of Cytonn’s properties and the fees associated with the OR’s services. “It’s concerning that the OR hasn’t even bothered to value the properties, nor given hints on the OR fees, yet he is promising creditors equal returns to what they invested,” Dande remarked, suggesting that the OR’s promises were unrealistic without proper valuation and transparency.
As the meeting concluded, Cytonn’s legal and management teams vowed to continue challenging the OR’s actions in court. With multiple legal battles still pending—including applications to lift preservation orders on key properties and ongoing appeals at the Court of Appeal—Cytonn remains committed to protecting its clients and ensuring that they receive the value they deserve. Dande urged patience, but assured clients that Cytonn’s restructuring plan would ultimately yield better results than liquidation under the OR’s oversight and that “Cytonn is deeply committed to restructuring and returning value to creditors”, he added.
