Supreme Court Halts Transfer of Cytonn Properties Pending Appeal

The Supreme Court has temporarily stopped the transfer of several high-value properties linked to Cytonn Investments, granting the firm a legal reprieve as it challenges earlier court orders arising from its insolvency dispute.

In a ruling delivered on Friday, the apex court issued conservatory orders suspending the implementation of a Court of Appeal decision that had allowed the Official Receiver to take control of and transfer the disputed properties.

The orders will remain in force until the Supreme Court hears and determines Cytonn’s appeal.

The affected properties include the Alma, Applewood, Riverrun, Taraji, The Ridge, Mystic Plains/Newtown and Kilimani developments.

“The Court grants conservatory orders restraining the respondent, by themselves, their servants, agents or any other person acting for and/or on their behalf from enforcing and/or implementing the vesting orders,” the court ruled.

The judges added that preserving the current position was in the public interest while the constitutional issues raised in the appeal are determined.

“We are persuaded that the public interest pivots towards allowing the stay of execution to maintain the status quo pending the conclusive determination of the parties’ rights through the appeal.”

The ruling marks a significant procedural victory for Cytonn, whose investment vehicles have been at the centre of a prolonged insolvency dispute involving thousands of investors and creditors.

Before granting the conservatory orders, the Supreme Court dismissed a preliminary objection by the Official Receiver, who had argued that the dispute was purely commercial and therefore fell outside the court’s constitutional jurisdiction.

However, the judges found that the appeal raises constitutional questions, including the right to property and the right to a fair hearing, allowing the case to proceed.

According to the court, although the dispute stems from insolvency proceedings, the appeal seeks to determine whether vesting orders issued under the Insolvency Act unlawfully interfere with the constitutional property rights of entities that are not under liquidation.

The bench further held that Cytonn had established an arguable appeal and that allowing the transfer of the properties before the case is heard could render any eventual judgment ineffective if the assets were sold to third parties.

The judges also noted that the matter involves competing interests between the Official Receiver, creditors, investors and potential purchasers, making it necessary to preserve the assets until the constitutional questions are conclusively determined.

In addition, the Supreme Court allowed the CHYS Creditors’ Committee and SBM Bank Kenya to join the proceedings as interested parties after finding that both had demonstrated a sufficient stake in the case.

The substantive appeal will now proceed before the Supreme Court, which will determine whether the Court of Appeal properly upheld the vesting orders and whether those orders are consistent with constitutional protections on property rights.

Until the appeal is concluded, ownership and transfer of the disputed properties will remain suspended under the conservatory orders.