NAIROBI, Kenya, July 3 – The Supreme Court has handed Cytonn Investments a temporary legal reprieve by suspending the implementation of Court of Appeal orders that had cleared the way for the Official Receiver to take control of and transfer several high-value properties linked to the firm’s troubled real estate investment schemes.
In a ruling delivered on Friday, the apex court granted conservatory orders preserving the disputed assets until it hears and determines Cytonn’s appeal, saying the matter raises arguable constitutional questions and that maintaining the status quo is in the public interest.
The decision temporarily bars the Official Receiver from enforcing vesting orders that would have enabled the transfer of properties including 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.”
“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.
The Supreme Court first 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.
Instead, the judges found that the appeal raises constitutional issues touching on the right to property and the right to a fair hearing, allowing the case to proceed.
The court held that although the dispute arises from insolvency proceedings, the appeal questions whether vesting orders issued under the Insolvency Act unlawfully interfere with constitutional property rights of entities that are not themselves under liquidation.
In granting the conservatory orders, the judges said Cytonn had demonstrated that the appeal was arguable and that allowing the transfer of the assets before the appeal is heard could render any eventual judgment ineffective because the properties could be sold to third parties.
The bench also noted that the dispute involves competing interests between the Official Receiver, creditors, investors and bona fide purchasers, making it necessary to preserve the assets until the constitutional issues are conclusively determined.
The court also allowed applications by the CHYS Creditors’ Committee and SBM Bank Kenya to join the proceedings as interested parties, finding that both had demonstrated a sufficient stake in the matter.
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 they are compatible with constitutional protections on property rights.
Until then, ownership and transfer of the disputed properties will remain frozen under the conservatory orders.
