Judge approves $1-billion deal in John Risley restructuring case, but dispute over artwork remains

Roughly US$1 billion in debt owed by businessman John Risley ‘s CFFI Ventures Inc. will be exchanged for virtually all of the Halifax company’s investment portfolio, bringing its six-month restructuring close to an end, after a Nova Scotia Supreme Court judge approved the deal on Friday.

But Justice John Keith imposed an additional condition requiring greater transparency over an unresolved dispute involving hundreds of artworks claimed personally by Risley.

Under the approved transaction, which is expected to close later this month, most of CFFI’s investments and other assets will pass to New Tide Capital LP, an affiliate of HPS Investment Partners LLC, CFFI’s largest lender.

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The company’s overall debt was approximately US$1.2 billion when CFFI entered creditor protection in March.

The judge said the transaction was the best available outcome after a court-supervised sale process failed to produce a competing offer capable of matching it.

FTI Consulting Inc. , CFFI’s court-appointed monitor, contacted 159 buyers during the process, but none of the seven preliminary bids submitted developed into a qualifying offer.

Keith said the HPS/New Tide transaction represented the best available offer and was preferable to bankruptcy. He said the sale process was fair and reasonable and no creditor opposed the transaction.

But the judge also focused on CFFI’s extensive art collection and Risley’s claim that hundreds of works listed in the company’s records belong to him personally.

CFFI lists 1,281 pieces of art as company assets, but a monitor’s report in June said 539 of them were earmarked for Risley. By August, that number had increased to 669.

Keith said he had no evidence that explained how or why the number had increased.