Cytonn’s Alma Project Cleared for Auction as Court Lifts Block on SBM Bank Recovery Move

The long-running dispute over Cytonn’s Alma residential project in Ruaka has taken a decisive turn after the Court of Appeal cleared the way for the property to be sold, paving the path for SBM Bank Kenya to recover a large unpaid loan tied to the development.

In its ruling delivered on Friday, the appellate court rejected an application by Cytonn Integrated Project LLP seeking to block the auction of the high-end estate known as The Alma, located on LR No. Kiambaa/Ruaka/6667. The judges found that the developer did not meet the legal requirements needed to stop the sale while it pursues an appeal.

With that decision, the last legal hurdle that had been holding back the auction has now been removed, giving lenders and the insolvency office authority to proceed with asset recovery.

The case is linked to a loan arrangement dating back to 2019, when Cytonn Integrated Project obtained financing of about Sh779 million from SBM Bank Kenya to construct the Alma development. The loan was secured using charges and debentures over the Ruaka property, effectively making the project collateral for the debt.

However, the repayment process became complicated after the collapse of Cytonn High Yield Solutions LLP, which had pooled investor funds and channelled them into various real estate-linked projects, including Cytonn’s special purpose vehicles.

As the financial structure unravelled, questions emerged over how funds were managed and whether proceeds from apartment sales were properly used to service outstanding loans. SBM Bank later accused Cytonn of diverting more than Sh672 million from property sales to other banking obligations instead of repaying the Alma construction loan.

The Official Receiver, who has been overseeing liquidation processes involving Cytonn-linked entities, also opposed efforts to delay the sale. The office argued that continued court delays were slowing down recovery efforts and negatively affecting more than 3,000 investors whose funds remain tied up in the broader Cytonn liquidation process.

In its judgment, the Court of Appeal bench noted that the arguments raised by Cytonn were largely attempts to revisit issues that had already been addressed in earlier rulings linked to the liquidation and preservation orders affecting Cytonn-related entities. The court further held that even if Cytonn suffers losses from the sale, such losses could be compensated financially, weakening its claim that the appeal would be rendered useless if the auction proceeds.

The three-judge bench ultimately sided with SBM Bank and the Official Receiver, confirming that the statutory power of sale over the property can proceed without further delay.