SBM Bank Kenya has secured legal priority in the ongoing liquidation of Cytonn-linked real estate assets, allowing it to enforce its security over The Alma, a 477-apartment residential development in Ruaka, Kiambu County. The High Court ruling strengthens the bank’s position as a secured creditor and marks a significant step in the recovery process of Cytonn High Yield Solutions (CHYS), which is under liquidation.
The Alma project in Ruaka, Kiambu County. The High Court has given SBM Bank priority to recover its defaulted construction loans from the sale of the 477-apartment development.
The court adopted a formal consent agreement between SBM Bank and the Official Receiver. This agreement confirms the bank’s first-ranking statutory power of sale over the property. The debt stems from construction facilities that have remained unpaid for more than six years.
Details of the Debt and Security
Court filings show that SBM Bank advanced an initial construction loan of Sh650 million. This was later followed by a further charge of Sh129 million and a fixed and floating debenture of Sh779 million. The total claim now exceeds Sh1 billion. All facilities were secured by a first-ranking legal charge registered over the Ruaka property in August 2019.
The Alma sits on 4.67 acres and consists of nine blocks with one-, two- and three-bedroom apartments, a commercial centre, swimming pool, gym and more than 300 parking spaces. The project has been valued at around Sh1.43 billion in previous liquidation documents.
Protection for Some Homeowners
The High Court provided protection for buyers who can demonstrate that they had fully paid for their units before SBM Bank registered its charge on 23 August 2019. Those buyers may have their units excluded from the pool available for sale, subject to submitting the required evidence to the bank.
The court made it clear that sale agreements alone are not enough. Buyers must produce concrete corroborating evidence such as bank statements or official receipts. Applications from 121 homeowners and other buyer groups were dismissed. Units purchased after the charge was registered remain available for SBM Bank to sell in order to recover the outstanding debt.
Impact on Unsecured Investors
This ruling has serious consequences for thousands of unsecured investors in Cytonn High Yield Solutions, which is under liquidation. CHYS raised billions of shillings from retail and institutional investors and channelled the money into various real estate special purpose vehicles. Most ordinary investors never registered charges over the properties, so they rank as unsecured creditors.
Under Kenyan insolvency law, secured creditors such as SBM Bank are paid first from the proceeds of asset sales. Only after the bank recovers its full claim will any remaining funds be available for the larger pool of unsecured creditors. The overall Cytonn insolvency involves an estimated investor exposure of more than Sh11 billion.
Many investors who put money into CHYS expecting high returns are now facing the reality that they may recover only a fraction of their capital, if anything at all, once secured lenders have been paid.
Broader Legal Context
The High Court decision comes after earlier Court of Appeal rulings that cleared the way for SBM Bank to exercise its statutory power of sale. Related Cytonn insolvency proceedings remain the subject of ongoing litigation, including constitutional questions before the Supreme Court concerning property rights and the scope of insolvency powers. Both SBM Bank and the CHYS Creditors’ Committee have been joined as interested parties in those proceedings.
The Official Receiver continues to manage the liquidation of Cytonn High Yield Solutions and related entities. The Alma is one of several high-value properties under preservation, alongside projects in Kilimani, Ruiru, Karen and other locations.
Read also:KCB Wins Priority Over Proctor & Allan Assets in Sh4.9bn Debt Row
What This Means for Kenyans
The case highlights the risks ordinary Kenyans face when investing in real estate schemes that rely on special purpose vehicles. Thousands of people, including professionals, retirees and small savers, put money into Cytonn products believing they were buying into secure property-backed returns. Many now find themselves ranking behind banks that properly registered their security.
For banks, the ruling reinforces the value of taking and perfecting security over real estate projects. For potential home buyers in large developments, it serves as a reminder to conduct thorough land searches and insist on proper documentation before making final payments.
As the liquidation process continues, attention will remain on how much value can still be realised from The Alma and other Cytonn-linked assets, and how fairly the remaining proceeds will be distributed among the thousands of unsecured investors waiting for recovery.
SBM Bank’s priority position is now firmly established. The next stage will be the practical enforcement of the sale and the eventual distribution of any residual funds once the bank’s claim is satisfied.
Sources
- Business Daily – SBM Bank obtains priority in Cytonn’s Ruaka assets sale (24 August 2026)
- High Court Commercial Division rulings in In re Cytonn High Yield Solutions (Insolvency Petition E063 of 2021)
- Court of Appeal decisions clearing SBM Bank’s statutory power of sale over The Alma
- Supreme Court Petition (Application) No. E001 of 2026 (conservatory orders and joinder of SBM Bank and CHYS Creditors’ Committee)
Figures and legal positions based on the latest High Court ruling reported today and publicly available court records. The overall liquidation remains subject to ongoing proceedings.