Investors in the troubled Cytonn Investment Management have reacted angrily to the company’s plans to sell off some of its assets, raising fears that they will lose their money with no recourse.
On Saturday, the aggrieved investors published a caveat emptor (buyer beware) notice in a newspaper advertisement, in an apparent attempt to halt the sale of assets they hope to use to recover money lost in two failed investment schemes run by Cytonn.
Cytonn High Yield Solutions LLP (CHYS) and Cytonn Real Estate Project Notes (CHN) investors have warned potential investors not to buy nine assets under Cytonn, citing administration orders issued last year.
“The assets listed in the schedule below are subject to the said Administration Orders having been acquired with proceeds from CHYS and CPN, and the investors in the two funds have a beneficial interest in the said properties,” the notice read in part.
Cytonn CEO Edwin Dande, on the other hand, dismissed the notices, claiming they have no legal standing.
Cytonn’s plans to sell properties in Nairobi, Machakos, and Kiambu have been condemned by investors, who claim the company has no right to do so without the consent of the 4,000 investors who put money into the CHYS and CPN schemes.
“It has come to the attention of the investors in CHYS and CPN that CIMP has advertised and/or put up for sale by private treaty and/or conversions some of the said assets. Members of the public are cautioned that the said assets/properties cannot be dealt with, transferred, or disposed of without the consent of the creditors and the approval of the court and that they should take care not to fall victim of any advertisements made by Cytonn or any of its affiliated companies,” the notice said in part.
Cytonn filed for insolvency last year, and the two schemes, CHYS and CPN, were placed under administration.
Investors argue that the administration orders are sufficient to prevent the investment firm from selling its assets.
“Those assets were acquired using our money and the administrator has identified them as some of the assets that can be used to recover our money. Therefore, Cytonn cannot sell them off without our consent. The caveat is meant to preserve assets that the investors have interest in,” Mr John Matheka, an investor, said.
Mr Dande, however, denied knowledge of the caveat and threatened legal action against the investors.
“We are taking legal advice and we shall keep you updated,” Mr Dande said.
The one-year administration period for the two investment schemes ends next week, much to the relief of investors eager to get their money back.
The investors have stated that they intend to seek receivership in order to recover billions of dollars in investment.
“The end of the administration period is a good thing because it now allows investors to commence legal action against Cytonn so that we can get our money back,” Ms Elizabeth Kaguamba, an investor, told the Nation.
Some of the investors are also pushing for forensic audit and criminal investigations into Cytonn, alleging the two botched investment plans were a Ponzi scheme.
“There should be an extensive forensic audit into Cytonn and we call on investigative bodies and authorities to take legal action,” Mr Stephen Kibuga said.
