Two of Cytonn Investment Management Plc’s entities, Cytonn High Yields Solutions and Cytonn Project Notes (CPN) have been placed under receivership.
In a document seen by Metropol TV, the High Court Commercial and tax Division has appointed Kereto Marima, a licensed Insolvency Practitioner as the Administrator of the property.
“…this court do hereby appoints Kereto Marima as Administrator of the property of CYTONN HIGH YIELDS SOLUTIONS LLP in accordance with the provisions of the Insolvency Act,” reads the court order.
The company’s Chief Executive Officer Edwin Dande initiated the process which will see the controversial property and Cytonn Project Notes (CPN) placed under the watch of a court appointed administrator.
Cytonn is expected to serve all its creditors covered in the two insolvent real-estate funds with the new order ahead of the mention next month.
What does it mean?
By putting the insolvent funds under administration, Cytonn is set to keep its aggrieved creditors off its back preventing scenarios such as auctions and attachments to its assets with the current insolvency law allowing companies to remain a going concern while in operations.
The court-appointed administrator will meanwhile attempt to rescue investments in the two funds and assure the best outcome to aggrieved investors.
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“First administration provides an enabling environment for restructuring under a competent administrator. Second, it gives a moratorium of any ongoing collection efforts so that all investors get to be treated equally,” said Cytonn Group CEO Edwin Dande.
Curiously, the voluntary administration is seemingly a counter reaction to a planned class suit by aggrieved investors which has been in the works since June this year.
With the two funds in administration, the aggrieved investors can no longer push to wind up the company as it now bears protection in the law.
Cytonn and Capital Markets Authority (CMA) have been at loggerheads after it emerged that thousands of Kenyans risk losing their cash through the Cytonn High Yield Solutions.
In August this year, Cytonnn Investment had threatened to sue CMA over defamation against the brand arguing that the authority was hurting the image of their brand and killing business.
In a letter to CMA Chief Executive Wycliffe Shamiah, Cytonn argued that attacks by Shamiah are a threat to an investment of over 30,000 Kenyans valued at over Ksh.20 billion.