The court of appeal judges comprising of Justices Kiage, Jamila Mohamed and Odunga delivered the decision in Civil Appeal Nos. E102, E103, E104 & E105 of 2024, all stemming from Insolvency Petition No. E063 of 2021.
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| In Courts |
The appeals filed by Valerina Jiwa & 289 others, Birgut Lamizana & 81 others, and Kennedy Muruli Musembi & 24 others, who sought to overturn Justice A. Mabeya’s decision placing Cytonn High Yields Solutions (CHYS) and related SPVs under liquidation.
The Court of Appeal agreed with the Official Receiver’s position that the SPVs were not genuinely independent entities.
“The various Cytonn SPVs were not genuinely separate legal entities but mere instrumentalities created to channel investor funds,”the court noted on its findings.
The judges emphasized that the entities operated in a deeply intertwined manner, sharing directors, promoters, and financial flows across companies.
As the bench put it, “Insisting on corporate separateness in these circumstances would result in grave injustice to the investing public.”
They further observed that the SPVs were largely the product of common promoters, stating: “These entities were the brainchild of the promoters and were used as conduits without the protections of true corporate independence.”
The Court went ahead and upheld the High Court’s preservation ,or vesting orders, including the contentious consent between the Official Receiver and SBM Bank (Kenya) Ltd over LR Kiambaa/Ruaka/667 (The Alma Project).
In its judgment, the bench affirmed that the consent was lawful, noting that “the vesting order was lawfully issued to protect the assets for the benefit of all creditors.” On the SBM consent, the Court held that “the arrangement enabled the secured creditor to realize its security, and no prejudice has been demonstrated.”
The Court added that “the interests of the appellants cannot override the rights of a secured creditor,” and reminded the parties that “a direct appeal cannot lie against a decree passed by consent.”
On the issue of joinder, the judges backed the High Court’s refusal to add one of the applicants as a party, reiterating that joinder decisions fall within judicial discretion.
“Whether to join a party is a discretionary matter, and we find no misdirection that would justify interference,”stated the court.
After re-evaluating the entire record, the Court concluded that the investors’ complaints had no basis. “Having considered these appeals, we find no merit in them,” the judges stated, before issuing the final order
“Accordingly, the consolidated appeals are dismissed with costs to the Official Receiver and the Creditors’ Committee,"noted the court.
The judgment was delivered in Nairobi on 21 November 2025.