KCB Group has received approval from the High Court to auction Cytonn’s Cysuites Hotel in a bid to recover a defaulted loan of Sh425.6 million. The court ruled that Cytonn Investments had no legal standing to stop the auction since it is not the registered owner of the property.
In a judgement delivered on 2 August 2026, Justice Freda Mugambi dismissed Cytonn Investments’ attempt to block the sale, determining that while Cytonn was a shareholder in the registered owner, Wasini Resorts Limited, it had no legal standing to interfere with the bank’s security rights.
Although Cytonn Investments argued that it was the beneficial owner of the Cysuites Apartment Hotel because it funded the acquisition of the borrower, Wasini Resorts Limited, the court ruled that share ownership does not equate to asset ownership.
The auction targets a defaulted loan of Sh425.6 million (US$3.2 million), which was secured by Wasini Resorts Limited using the property’s title deed as security.
The facility was extended by KCB Group to Wasini Resorts Limited for the construction of the six-block serviced apartment complex located in Westlands, Nairobi.
The court case showed that Cytonn Investment Partners Twenty LLP bought one million shares in the company in 2018. The shares were purchased for Sh1 billion using money from Cytonn’s investment fund, Cytonn High Yields Solutions (CHYS LLP), which was created on 11 April 2018.
Cytonn contended that because it had funded the acquisition of Wasini Resorts using Sh1 billion from the liquidated Cytonn High Yields Solutions (CHYS LLP), it had the right to intervene and negotiate a debt restructuring.
The court ruled that owning shares in a company does not mean owning the company’s property. Since Cytonn admitted it was not the borrower, it had no legal right to claim the property or stop the bank from enforcing its security over the asset.
“Shareholders are entitled only to a share of the profits while the company is a going concern, and to a distribution of surplus assets upon winding up. They cannot arrogate to themselves ownership rights over the company’s assets during its existence,” said Justice Mugambi.
In addition, Cytonn told the court that it had negotiated with KCB Group to restructure the debt. The firm claimed that it was still willing to continue servicing the loan.
However, the court ruled that restructuring is not a statutory entitlement but a matter of contractual negotiation.
“A chargor cannot compel a chargee to accept a restructuring arrangement in lieu of repayment,” Justice Mugambi said.
“The right to restructure is not a statutory entitlement but a matter of contractual negotiation.”
The court dismissed Cytonn’s reliance on its share purchase agreement, noting that it had no bearing on the bank’s security.
– By Regan Oluoch
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