The High Court of Kenya has directed the official receiver to convene a meeting with creditors of Cytonn High Yield Solutions (CHYS) and Cytonn Project Notes (CPN), two real estate investment funds currently under liquidation. This development marks a significant milestone in the ongoing legal proceedings surrounding the troubled investment vehicles managed by Cytonn Investments.
According to a press release issued by Cytonn on October 2, 2024, the official receiver is expected to publish a notice in national newspapers by Friday this week, detailing the upcoming meeting. The primary objective of this gathering is to provide investors with an update on the progress of the liquidation process.
The court’s decision comes in the wake of mounting pressure from investors seeking clarity on the fate of their investments in CHYS and CPN. These funds, which were heavily invested in the real estate sector, faced significant challenges following the onset of the COVID-19 pandemic, leading to their eventual liquidation.
Edwin Dande, CEO of Cytonn Investments, highlighted the complexities involved in managing the interests of approximately 4,000 investors.
“Getting all 4,000 investors to come to an agreement is a challenging task, which is why we find ourselves in court,” Dande stated. He emphasized the company’s focus on completing ongoing projects, saying, “Our primary goal is to complete the ongoing projects. We do not need to raise additional funds for this; instead, we plan to sell some of the idle projects and finish the ones that are already underway then repay our investors.”
The court has set November 22, 2024, as the date for further directives on the matter. In the meantime, investors have been instructed to submit their proof of debt filings within 90 days from the court ruling issued on September 27, 2024.
Cytonn has attributed the challenges faced by CHYS and CPN to the unprecedented disruptions caused by the COVID-19 pandemic, which severely impacted the real estate sector. The company invoked a force majeure clause in response to these unforeseen circumstances, a decision that has been contested by some investors through legal channels.
Despite the ongoing liquidation of CHYS and CPN, Cytonn has emphasized that all other entities under its umbrella remain solvent and continue to operate as separate legal entities. The company has particularly stressed the stability of the Cytonn Money Market Fund (CMMF), which is regulated by the Capital Markets Authority (CMA) and unaffected by the CHYS/CPN situation.
