CHYS-CPN-faqs

Frequently Asked Questions (FAQs)

Status of CHYS/CPN Investments

Clarify whether there was an insurance cover against loss of clients’ investments in CHYS/CPN

There was no insurance cover against loss in CHYS/CPN investments
I had invested in CPN & CHYS and I feel I am left out from the whole process as I am a resident outside of Kenya

All investors on record in both CHYS/CPN, both local and diaspora clients, are included in the ongoing debt resolution.
What is the position of the CHYS/CPN Creditors vis a vis the Senior Lenders such as Banks? Does it matter that the Bank came in later?

Senior Lenders such as Banks and funds with registered charge documents are secured creditors who rank higher than unsecured creditors including the CHYS/CPN investors, therefore at the point of debt settlement, senior and secured lenders are paid first. It does not matter at what time they invested into the projects at the point of cashflow settlement.
Is there a WhatsApp group for CHYS/CPN investors and how do I get the link to join in?

There is a telegram group to which one is added. See herein the link to support the debt settlement proposal through restructuring.
What is the current position of the assets and liabilities of the CHYS/CPN funds?

The assets and liabilities of the CHYS/COPN funds are to being handled by the Official Receiver as the liquidator over the funds.
Is it possible to confirm to each individual your confirmed figure in both investments?

Yes. This was shared on 31st August 2021.

Appeal of the Ruling in Insolvency Cause E063 of 2021 and EO64 of 2021.

Is the appeal window still open?

Yes, the appeal window is still open however, clients need to make a quick decision whether they are supporting restructuring or liquidation, as there is an imminent risk of asset disposal to pay off senior lenders first and leaving CHYS/CPN creditors unable to realize best value on quick asset disposals.
Is the appeal based on the number of investors or the amount each investor has invested in the products?

No. The appeal will be purely based on merit and the arguments placed before the judge. However, having more clients supporting the debt settlement proposal as opposed to the liquidation process will strengthen the appeal case.
If investors have already filed with the OR can they still enjoin in the appeal?

Yes. Filing the proof of debt was only a formality. That does not prevent one from supporting restructuring to realize best value for investors funds.
The Appeal is being handled by Mali Advocates where Cytonn’s CEO is supposedly an owner. Isn’t that a conflict of interest?

Edwin Dande is not and cannot be part owner of a Law Firm as he is not admitted as an Advocate of the High Court. His dealings in Mali are limited to consultations on business due to his extensive experience in the Cytonn business that has litigations. Furthermore, in the case of the Appeal, Cytonn’s interests and those of the creditors and/or real estate unit holders are aligned.
Clarify the appeal legal fee that investors have been asked to pay of Kshs.30,000, if one opts for this?

Only investors in Real Estate, who are seeking to enjoin on appeals pay the appeal fees of Kshs. 30,000. A deposit of Kshs. 10,000 is paid on initial instruction, the balance is paid as follows; Kshs.10,000 is to be paid at hearing stage; and Kshs. 10,000 to be paid on judgment.
What if Mali fails to deliver, do you refund the appeal legal fees paid by Real Estate Investors?

Just like any other court matter, Mali Advocates will represent the real estate holders and CHYS/CPN investors to the best of their ability in accordance with the duty owed to every client by their Advocates. However, the final decision rests with the Court. The fees are not refundable, however the appeal is a consideration each investor needs to undertake if they deem that in their best interest to pursue the restructuring, in the benefit of getting best value for their investments.
Is Mali Advocates legal fees for CHYS/CPN clients catered for by Cytonn?

Yes. CHYS/CPN do not pay any appeal legal fees, the legal fees are currently being borne by Cytonn.
How does one join the group of investors going to court?

You can do this by signing the restructuring support letter. Kindly follow this link to download a copy, fill in the details and share back to clientservices@cytonn.com

Progress of the Liquidation Process.

How many investors have filed proof of debt with the Official Receiver (OR) to date and what value is represented?

This information can only be acquired from the office of the Official Receiver. However Cytonn shared with OR information for all investors balances as per their request for information.
What progress has the OR done so far? Has the liquidator even shared a plan or a proposal?

We are not in a position to speak on behalf of the OR, he has however organized one official meeting; and subsequently sent letters to investor; using the official domain brs.go.ke. However, we know he has been engaging the clients and any progress from their side has been updated to the clients who have attended the meetings organized by their offices.
What happens if I have not submitted the proof of debt yet?

Do get intouch with the office of the Official Receiver whose offices are located on 17th Floor, 316 Upperhill Chambers, 2nd Ngong Avenue, Upperhill, Nairobi, Kenya
The Liquidator highlighted that before the Creditors get paid they would first pay themselves from whatever they have gotten before paying others. Kindly elaborate.

In accordance with Insolvency Laws, the Official Receiver as Liquidator is entitled to receive compensation for costs incurred in the Liquidation process.
How is your work relationship with the OR given that you don't support liquidation?

We are obliged by law to cooperate with the OR, which we have continued to do, including supplying information related to the two funds, until such a time when liquidation will be stopped by the court through the ongoing appeals.

Debt Settlement Plan (Restructuring) vs. Liquidation.

Now that the court has given orders for liquidation, what does that mean to us or me as an individual investor simply put?

The Liquidation process provides for the winding up of the CHYS/CPN investment vehicles. The Official Receiver takes over the funds, gathers all the assets and pays all liabilities, in order of senior and secured creditors, followed by unsecured creditors. The CHYS/CPN Creditors will be paid out as part of the unsecured creditors/liabilities.
Under Liquidation how much will creditors recover and what basis have you achieved this figure ?

From Cytonn’s analysis, Liquidation will result in creditors recovering only 14% of their total investments. This figure was achieved by the disposal of the assets at forced sale values in the market; and offsetting the liabilities owed to the senior and secured lenders first; then CHYS/CPN and other creditors such as vendors who are owed who are unsecured.

The liquidation values for example will consider incomplete projects disposal values, based on market update. The values will also consider what is due to secured lenders first, and finally trickling down to unsecured creditors.
How is the DSP as proposed by Cytonn more beneficial to Creditors as opposed to Liquidation?

From our analysis, a liquidation will result in the creditors recovering only 14% of their total investment while they will recover their full Principal via the DSP.
You are still proposing restructuring yet the liquidation order was issued. Can the two work together? Is this meeting meant to convince investors to oppose the liquidation order?

Restructuring and liquidation cannot work together since they stand for different ideologies. The meeting is meant to convince the investors to support restructuring since it stands for more value for the investors.
I thought with the liquidation process underway, the train has already left the station and the situation is irreversible. How do you plan to stop this for restructuring to kick in?

Yes, the liquidation process is already underway. However our legal team had already filed a notice of appeal in the appellate court and obtained the certificate of delay.In light of this the liquidation process can still be stopped.
How do you sign up for the restructuring and can one do it immediately?

By signing the Restructuring Support Letter/Form as provided by the Principal Partner and can be accessed under this link.
Why an option of forming a new company when assumptions are you will be trading profitably?

This decision was arrived at after receiving feedback from CHYS/CPN Clients that an independent entity should implement the Restructuring.
Can we have a neutral receiver manager spearhead the restructuring process?

The investors will be part of the Board spearheading the restructuring and thus can easily keep track of the process.
What changes have happened in Cytonn internally to give confidence to us, the CHYS/CPN investors, to entrust interest back to them that our interest will be covered?

The investors will be part of the Board spearheading the restructuring and thus can easily keep track of the process and ensure the CHYS/CPN investors’ interest is covered. Furthermore, the restructuring is to be approved by the court, it will be binding and the fund manager will be held accountable in case it is not fruitful.
If the projects proceed in line with the Debt Settlement Plan, are investors guaranteed to get 100% principal over 5-6 years? Is this documented, guaranteed and you will be held accountable if not affected?

Our evaluation of the complete projects easily shows that we can refund 100% of the money paid in the said period.Given that the restructuring proposal has to be approved by the court, it will be binding and the fund manager will be held accountable in case it is not fruitful.
The DSP proposes that investors waive interests in 2020 and 2021, but what about 2023 to 2028?

During that period we will be working to complete the project and recover the principal in full first. Any monies raised above that will be distributed to the clients in an equitable manner
Does the DSP take into account the value of money in the year 2020 versus 7-8 years from now i.e. 2030? The value for money is just depreciating over the years. How will the repayment to investors in the suggested phased approach factor in inflation?

Unfortunately from our analysis, despite Cytonn’s best efforts, we will only be able to give back Principal invested.
If we have to go the restructuring way, can the first 20% be paid immediately to assure investors?

As we have shared, the funds are currently illiquid and there are insufficient funds to pay out 20%. As indicated in the DSP that we have shared with the creditors and the Official Receiver, the repayment plan will be 20% in 2025, 20% in 2026, 20% in 2027 and 40% in 2028.
There was a chance for restructuring 2021/2022. Nothing happened. How can we be sure something will happen this time?

In 2021/2022 we were in discussions with the Administrator on the restructuring plan. However, discussions with the Administrator were unfruitful as the funds were put into liquidation before any meaningful progress could be made.
Why not refund the principal to small investors with 1 million and below not interested in projects?

All clients must be treated equally and fairly. Furthermore, it is not easy to specify what small amounts really mean. Once the DSP is approved, the Board which includes the creditors’ representative may vote to allow extreme cases to be paid out first.
How many creditors have signed the restructuring form? Is it verifiable?

As of 30th June 2023, the number of CHYS/CPN Creditors who have signed the restructuring agreement are 60. The list has been growing since then.
Where is the 100% realization when we propose to convert half of the principal to equity?

The DSP proposes that CIM will float its shares on a Unlisted Security Platform (USP). We expect this move to open doors for investors to buy back shares at KShs 1.5 bn per year from equity holders who seek to exit early.
For those interested in buyouts what is the way forward?

This is welcome, if you have a buyer we will assist in completing the buyout process, if not we will notify you when we have a buyer ready.
Why not value the assets through independent value and request transfer to willing investors who can dispose them at credible rates and own time?

Conversion and assignment of CHYS/CPN investments was an option offered to all investors and those willing already took up real estate units to dispose at credible rates at their own time.
How does the DSP define the principal in 2019 for someone whose investment dates back to say 2017?

Principal, regardless of period of investment, is simply the amount that the investor sent into the funds. This means we shall exclude any interest accrued whether paid or not yet paid. This was confirmed at a meeting with the Official Receiver on 7th March 2023.
Are the real estate projects envisioned in the Debt Settlement Plan (DSP) currently ongoing or are they still stalled?

The projects are currently on hold due to illiquidity of funds and the preservation orders issued by the High Court in E063 of 2021 and E064 of 2021
Can the interest for 2020/2021 be converted to equity and not waived?

The period after the Covid-19 pandemic has not seen much activity in real estate and that is why the investment manager is proposing a waiver of that interest. However, we expect the share component of the restructuring offer to make up for the lost interest when the shares gain in value.
Is it only the CHYS/CPN creditors who are being asked to waive interest or all other stakeholders?

We have negotiated with all stakeholders including the banks for the best possible outcome for everyone involved.
Can Cytonn allow creditors to propose their own restructuring offer?

The Current debt settlement plan (DSP) was arrived at after expert analysis of the current illiquidity of the CHYS/CPN funds and realistic projections of what is indeed possible while considering what is in the best interest of the CHYS/CPN Clients. We have, however, always been open to suggestions and have incorporated recommendations by the CHYS/CPN Creditors which we have received in all CHYS/CPN Restructuring Meetings.
What happens to those that will not take any action/route restructuring or liquidation but wait on Cytonn to do the right and fair thing by 2030?

Failure to take a stand means a Creditor has no say in what happens with his/her investments which we deem a risky approach.
Why waiver of interest for 2020 & 2021 yet you were collecting money from investors even during that period? Further, if the assets are gaining in value why not pay interest?

The collections during post covid were not significant enough to advance the projects. Not much has happened to the projects and consequently we need to restructure so as to advance the projects.
How will Cytonn mobilize funds needed to complete projects as proposed in the DSP with all the litigations and legalities confronted?

This will be achieved through asset sales e.g Kilimani Land. We foresee reduced litigation following the consensus arrived at between Cytonn and the CHYS/CPN creditors
Noting that you have been unable to sell the Kilimani plot so far, what timescales are you giving for the restructuring plan and the sale of assets including Kilimani?

Prior to the preservation orders issued on 6th January 2023, we had received bids from several interested buyers and our lawyers had already shared the sale Agreement with the most eligible buyer to begin the sale process. There are many potential buyers who have only been deterred by the court ruling.

Cytonn Real Estate Holdings.

What led to the halting of the Real Estate Projects

Our aggressive real estate strategy was upended by the onset of Covid 19, which upset the liquidity of real estate funds globally. Further, the effects of the incessant negative publicity driven by CMA’s management and several others also led to put a strain on our two main real estate funds during an already difficult period. This led us to only do one project at a time starting with ‘The Alma’.
What happens to those who converted to River run plots and made all the required payments?

They are welcome to join the appeal of lifting preservation orders. This is done by signing the Real Estate Appeal Letter (REAL) available on this link and paying kshs.30,000 legal fees.A deposit of Kshs. 10,000 is paid on initial instruction, the balance is paid as follows; Kshs.10,000 is to be paid at hearing stage; and Kshs. 10,000 to be paid on judgment
My unit at the Alma is already paid for, when/how can we get our Sub Lease and ownership documents and/or possession. What is the best way forward?

The preservation orders issued by the High Court on 6th January 2023 in Insolvency Petition E063 of 2021 and E064 of 2021 prevent transfer of Title to yourself. We advise you to join the appeal by real estate unit holders like yourself who have been prevented from concluding the transfer process by the said orders. For further assistance on all other matters including possession please contact rei@cytonn.com
Is it true that Alma has never sold because of density? More than 100 units per acre is too much for a premium property.

Alma had been selling well prior to the preservation orders issued by the High Court in Insolvency Petition E063 of 2021 and Insolvency Petition E064 of 2021.
I paid 80% for an apartment in The Ridge. How should I proceed?

The preservation orders issued by the High Court on 6th January 2023 in Insolvency Petition E063 of 2021 and E064 of 2021 prevent transfer of Title to yourself. We advise you to join the appeal by real estate unit holders like yourself who have been prevented from concluding the transfer process by the said orders. For further assistance on all other matters including possession please contact rei@cytonn.com
How does liquidation impact clients who have already converted to Cysuites?

Cysuites clients form part of the creditors who have a claim on the Property.
When will the Ridge be completed?

Construction of the Ridge is expected to commence once the Alma is completed i.e. approximately two quarters after the DSP is approved.
What will it absolutely take to lift the preservation order on Cytonn Real Estate?

A positive ruling on the stay application and/or Appeal by the High Court and Court of Appeal respectively.
If I would want to convert my portfolio to a plot in River Run can the terms be made friendly?

Due to the ruling delivered by the High Court in Insolvency Cause E063 of 2021 and Insolvency Cause E064 of 2021, Riverrun is under preservation and thus no transfer can be done.

Cytonn Investment Products

SEIP was not amongst the troubled products so what is the way forward for SEIP investors?

We have engaged all our SEIP clients and we have a repayment plan which both parties agreed and we have already started funds disbursement.

Cytonn Litigation.

Will Cytonn withdraw the court processes it has lodged on some investors as a way forward?

All Court processes lodged by Cytonn were done in a bid to protect the brand’s brand and reputation.

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