Court of Appeal upholds High Court decision on Cytonn liquidation

The Court of Appeal has upheld a decision by High Court Judge Alfred Mabeya, effectively allowing the liquidation of the Cytonn High Yield Solutions (CHYS) and Cytonn Real Estate Project Notes (CPN) funds to proceed.

In a judgment delivered on November 21, 2025, Justices Patrick Kiage, Jamila Mohammed, and George Odunga dismissed all four consolidated appeals, affirming that the Official Receiver is legally mandated to take control of preserved assets and oversee the liquidation process.

The court found that the investment structure used by the Cytonn entities—particularly the Special Purpose Vehicles (SPVs)—did not provide grounds to exclude properties acquired through investor funds from the liquidation.

According to the judgment, “the complex structure of Special Purpose Vehicles (SPVs) used by the funds’ promoters could not shield assets bought with investor money.”

The court affirmed that the SPVs were closely linked to Cytonn Investment Management PLC (CIMP) and its promoter, Edwin Harold Dayan Dande.

The judges noted that the SPVs had not demonstrated financial independence from CHYS. They held that the doctrine of separate legal personality could not be relied upon to prevent the recovery of assets for creditors.

“It is deductible that the manner in which the SPVs were established was dubious, as the entities and the SPVs are all undeniably connected through their shared control and promoters being the same people, and more so, Edwin Dande’s influence over the SPVs and CHYS,” the ruling stated.

The court also addressed concerns raised by claimants who argued that some properties should not form part of the liquidation because they were allegedly owned by bona fide purchasers. The judges held that such claims must be supported by evidence presented to the liquidator.

“The burden is upon a person who wishes to have a certain property removed from the liquidation process to place before the liquidator evidence in support of that claim,” the judgment reads.

“We have not been told that any such evidence was placed before the liquidator and that it was not acted upon.”

On the question of injunctive relief, the appellate bench agreed with the High Court that no irreparable loss had been demonstrated. It upheld the finding that CIMP had failed to establish a prima facie case regarding its interest in the projects.

The court also ruled that the application by the third appellant, filed on the basis of a guarantee, had been misconceived because its liability could not be properly determined in proceedings where it was not the subject.

Summarising its conclusions, the Court of Appeal stated: the third appellant’s interests as a guarantor could not be addressed within the liquidation proceedings.

It also stated that no irreparable harm was proven to warrant an injunction halting the liquidation.

Consequently, the court said the preservation orders and the process led by the Official Receiver remained valid and that all the appeals lacked merit and were dismissed with costs to the Official Receiver and the Creditors’ Committee.

“Having considered these appeals, we find no merit in them and consequently, we dismiss them with costs to the 1st respondent (the official receiver) and the Creditor’s Committee,” they ruled.

The judgment was delivered in Nairobi and signed by Justices Kiage, Mohammed, and Odunga.