Investment firm Cytonn is in fresh trouble after the official receiver moved to the High Court to compel it to release title deeds to a property in Kilimani, Nairobi, belonging to one of the subsidiaries.
In the application filed at the High Court, the official receiver says the parent company Cytonn Investments Management Plc is holding three title deeds belonging to Cytonn High Yields (CHYS) LLP, which was placed under liquidation on January 6 by Justice Alfred Mabeya.
Read: Cytonn liquidation ordered to recover Sh14bn investor funds
More than 3,000 people had reportedly invested more than Sh3 billion in one of the Cytonn subsidiaries.
Ms Judy Mugo, an assistant official receiver, said in the application that despite the liquidation order and being asked to surrender the title documents, the parent company has refused to hand over the documents.
“That in order to preserve the creditors’ assets and in line with the powers vested in the official receiver as the liquidator under the Insolvency Act, the Kilimani property should vest with the official receiver,” said Ms Mugo.
She said the official receiver would protect the creditors’ interests and funds, particularly Cytonn Investment 16 (CIP16), from being transferred or disposed of.
The official receiver alleged that CHYS entered into a financing agreement with CIP16 for Sh3 billion at an interest rate of 21 percent per annum, and the money might get lost if the court does not intervene.
“That it is, therefore, trite that this honourable court does compel Cytonn Investments Management Plc, or any other related Cytonn entity to surrender the three Kilimani property title documents to the official receiver,” she said.
The application states that the official receiver will value the property, dispose of it and refund the investors their money.
CHYS was a collection basket where funds were collected from the investors who are the public and had applied for investments in independent special purpose vehicles registered by the parent company.
Ms Mugo said the property in Kilimani is part of the assets owned by CHYS as the funds used to purchase it were drawn from the partnership.
Court documents state that CIP15 and CIP16 borrowed Sh500 million and Sh3 billion respectively from CHYS and the same was applied to different projects.
Three parcels
Further, the documents state that Sh25 million was used to buy 12.5 percent ordinary shares from Superior Homes (Kenya) PLC while the Sh3 billion was used to purchase three parcels of land in Kilimani.
CHYS was registered to invest funds by the partners in various investment opportunities sourced by the fund manager.
Read: CMA issues fresh rules to check Cytonn’s cash raising model
That Cytonn High Yield Solutions LLP was registered with its main object being t invest by the partners in various investment opportunities sourced by the fund manager, with the partners being Cytonn Investment Management Plc and Edwin Harold Dayan Dande,” the petition says.
