The State will today open the auction of Cytonn Investments' multi-billion shilling real estate properties under two investment vehicles, paving the way for the recovery of Sh11 billion belonging to over 3,000 investors.
The Business Registration Services (BRS) is seeking bids for properties linked to Cytonn High Yield Solutions (CHYS) and Cytonn Real Estate Project Notes (CPN).
The auction comes months after Cytonn Investments lost all 19 appeals challenging the liquidation of the two investment vehicles.
In November last year, the Court of Appeal upheld the High Court's verdicts, dismissing attempts by creditors and certain investors to halt the liquidation process.
The decision to liquidate Cytonn’s two funds came after they failed to meet their financial obligations to investors.
Defaults on interest triggered a legal process that led to CHYS and CPN being placed under liquidation on January 6, 2023, in an effort to recover investors’ money.
“The Official Receiver in Insolvency, in exercise of its power as the Liquidator of Cytonn High Yield Solutions LLP (in liquidation) & Cytonn Real Estate Project Notes LLP (in liquidation) invites interested eligible bidders to tender for the disposal of properties,” says the
tender notice. The Office of the Official Receiver is established under Section 703 of the Insolvency Act.
The office is under BRS, a semi-autonomous government agency under the Office of the Attorney-General and Department of Justice.
The complete list of assets set for auction spans multiple prime properties across Nairobi and its environs, collectively worth billions of shillings.
Properties set for liquidation are several high-value real estate developments, including The Alma (valued at Sh1.43 billion), Kilimani (Sh1.73 billion), Amara Ridge (Sh502.8 million), and Superior Homes (Sh383.9 million).
Cytonn's financial troubles first became public knowledge in 2021 when its promoters (Edwin Dande and Cytonn Investments Management PLC) petitioned the court for administration orders regarding CHYS and CPN, admitting their inability to meet financial obligations.
While the SPVs were registered under the Limited Liability Partnership Act as distinct legal persons, company records (Form CR12s) showed Mr Dande appearing as the principal partner in nearly all of them—a fact that significantly undermined claims of genuine corporate separation.
The Court of Appeal dispute hinged on whether the Cytonn-linked special purpose vehicles (SPVs)—legally separate entities that developed real estate projects using CHYS and CPN funds—could claim financial independence from Cytonn.
However, court documents revealed an intricate financial web connecting Cytonn Investments Management PLC (the principal partner), CHYS, CPN, and numerous SPVs. CHYS and CPN essentially served as collection vehicles pooling funds from retail investors, which were then channelled to various SPVs registered by Cytonn Investments Management PLC.
These SPVs were created to acquire and develop properties whose sales would generate returns for investors.
The court found that despite their technical corporate autonomy, the SPVs were inextricably intertwined with Cytonn Investments through shared directorship under Mr Dande, who served as CHYS's chief executive while simultaneously controlling the SPVs.
The Court of Appeal endorsed the High Court's characterisation of the SPVs' operations as "a scheme akin to fraud," clarifying that this strong language was not indicative of judicial bias but rather an accurate description of the financial arrangements under scrutiny.
The judges said the court must be sensitive to the plight of over 3,000 members of the public, who sank their over Sh11 billion into these projects.
This judicial philosophy found full support at the appellate level, with the three-judge bench concurring that "the balance of convenience tilts overwhelmingly in favour of allowing the liquidation process to reach its natural conclusion."
Founded in 2014 by Mr Dande and other partners, Cytonn became popular for offering a range of residential and mixed-use properties to retail and institutional investors in the real estate sector, structured solutions, private equity and advisory.
It also established 17 SPVs for investment purposes.
