SBM Bank obtains priority in Cytonn Ruaka assets sale

SBM Bank has secured priority in the liquidation of a Cytonn-backed residential project in Ruaka as it seeks to recover a Sh650 million loan that fell into default six years ago.

The High Court upheld the bank’s right to enforce its security over The Alma, a development owned by Cytonn High Yield Solutions. The investment vehicle had raised billions from investors for real-estate schemes through special-purpose entities.

The court also protected buyers who can prove they fully paid for their apartments before the bank registered its charge in August 2019. Those units may be excluded from the pool available for sale.

The Alma sits on 4.67 acres and comprises nine blocks with 477 one-, two- and three-bedroom apartments. Amenities include a commercial centre, swimming pool, gym, nursery, elevated playgrounds and more than 300 parking spaces.

The ruling dealt a setback to more than 25,000 investors in the company and 110 homeowners who had sought to join the liquidation case or halt the bank’s recovery efforts.

The dispute forms part of the wider collapse of Cytonn High Yield Solutions. The firm was placed under liquidation in January 2023 after its administration failed to produce a rescue plan. The Court of Appeal upheld that liquidation in November 2025.

The Alma, valued at about Sh1.43 billion, was among the properties preserved for the process. Creditors’ claims linked to the assets exceeded Sh11 billion.

In the latest decision the High Court ruled that any homeowner who proves full payment of the purchase price to the developer before August 23, 2019, and places that evidence before SBM, is entitled to have the unit removed from the sale pool.

Buyers who purchased after the charge was registered stand in a different position. The court noted that the charge had by then become a public record. Purchasers were required to conduct reasonable checks at the Lands Registry before paying the developer.

A buyer who failed to search the registry cannot claim protection as an innocent purchaser. Units bought after August 23, 2019, therefore remain available to SBM for sale under its statutory power to recover the outstanding debt.

The court dismissed an application by Paul Opiyo, who sought to join the proceedings on behalf of 25,000 Cytonn High Yield Fund investors. Those investors were said to have put more than Sh300 million into developments affected by the preservation orders. The same question was already before the Court of Appeal.

Homeowners who applied for protection also failed. The court held that sale agreements alone did not prove payment. Evidence such as bank statements or receipts reflecting payment of the purchase price was required.

Applications by 121 homeowners and several individual buyers were dismissed. Cytonn Integrated Project LLP likewise failed to overturn a consent between SBM Bank and the Official Receiver that confirmed the lender’s secured recovery rights over The Alma. That agreement had been adopted as a court order in November 2023.

The insolvency process continues, with the Official Receiver pursuing creditors’ claims and the realisation of assets.