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Investor seeks Cytonn liquidation over Sh14m debt

DANDE

Cytonn Investments CEO Edwin Dande. FILE PHOTO | NMG

Summary

  • A businessman says Cytonn is unable to settle its obligations upon maturity of funds in one of its pools.

A businessman has moved to court seeking liquidation of investment firm Cytonn over failure to pay Sh14 million upon maturity of funds in one of its pools. 

George Kirigi Thogo, in an insolvency petition filed at the High Court in Nairobi, says the property developer is indebted to him for a sum of Sh14,264,538 being the principal amount and interest. The money is still earning interest.

Mr Thogo says that between October 18, 2019 and February 7, 2020, he topped up his investment, also known as Further Investment Agreement, having previously invested in one of the company's funds -- the Cytonn High Yield Solutions (CHYS) Scheme.

Mr Thogo says he invested Sh12,994,883 in three tranches of Sh7 million with a maturity date of October 26, this year and a return rate of 19 per cent, Sh4 million set to mature on April 27, 2020 with a return rate of 16.5 percent and Sh1,994,883 to mature on August 10, 2020 with a return rate of 16.5 per cent. 

However, on April 1 this year, Cytonn sent him a statement indicating that it had adjusted the maturity dates of all his investments, noting that it had “powers to unilaterally amend the terms of the agreement”.

On June 3,  Cytonn further told Mr Thogo that it had postponed its obligations (to pay the securities and interests) because the real estate market where it had invested the money was facing challenges, which had made it impossible to refund Mr Thogo's money.

“Although the company had indicated that it was willing to hold discussions and resolve the matter amicably, no proposals have been forthcoming,” Mr Thogo says in his petition filed through Kiarie Kariuki & Githii Advocates.

He adds attempts to settle the matter with various representatives of the company, whom he had reached on phone, did not bear any fruit. 

“In these circumstances, there is a statutory presumption that the company is unable to pay its debt and is therefore consequently liable to be wound up,” says Mr Thogo. 

He wants the company, incorporated on September 12, 2014, to be wound up by the court under the provisions of the Companies Act and an official receiver be appointed as a provisional liquidator.

Mr Thogo also wants the outstanding amount, together with interest and the cost of the insolvency petition granted to him and paid out of Cytonn’s assets.

The petition indicates that nominal share capital of the company is Sh15 million divided into 40,000,000 Class A shares of Sh0.10 each and 110 million Class B shares of Sh0.10 each.

In September, the Capital Markets Authority had raised concerns that one of the funds -- Cytonn High Yield Solutions -- and debt security raised from investors dubbed Cytonn Project Notes posed risks to the investing public after investors filed complaints against it for failure to pay Sh122.8 million upon maturity of funds.