Supreme Court Freezes State Takeover of Sh11 Billion Cytonn Real Estate Assets

The Supreme Court of Kenya has granted temporary legal reprieve to Cytonn Investments by freezing the enforcement of a recovery plan targeting real estate projects valued at Sh11 billion.

The decision halts the Official Receiver from taking immediate control or transferring several prominent real estate developments linked to the firm.

Prior to this intervention, the state was moving to execute vesting orders that would have placed high-value construction developments under liquidation management.

The frozen properties include key urban residential projects such as The Alma, Applewood, Riverrun, Taraji, and The Ridge.

The order also protects the Mystic Plains, which is also known as Newtown, alongside properties located in Kilimani.

The apex court found that the intended appeal raised critical constitutional questions regarding property rights.

The judges ruled that maintaining the status quo is in the public interest, preventing the potential sale of these real estate assets to third parties before a definitive judgment.

The legal battle stems from insolvency proceedings involving Cytonn High Yield Solutions (CHYS) and Cytonn Real Estate Project Notes (CPN).

The Court of Appeal had earlier cleared the state to liquidating the properties, prompting Cytonn to seek apex court intervention.

The firm argued that vesting orders issued under the Insolvency Act unlawfully interfered with the constitutional property rights of entities not under direct liquidation.

The bench agreed that the appeal is arguable, noting that transferring the assets prematurely could render any final judgment ineffective.

Several entities have a stake in the outcome of this commercial dispute, which affects thousands of investors and homebuyers.

The court allowed the CHYS Creditors' Committee and SBM Bank Kenya to join the ongoing proceedings as interested parties.

The substantive appeal will now proceed before the Supreme Court to determine whether the vesting orders are compatible with property protections.

Until the highest court issues its final determination, ownership and transfers of the disputed construction projects remain strictly frozen.