Court approves CFFI asset sale and orders reporting on disputed Risley artwork

The Supreme Court of Nova Scotia has approved the sale of most of CFFI Ventures Inc.’s assets to an affiliate of its secured creditors, but required further reporting to the court on any settlement over artwork claimed personally by businessman John Risley. In CFFI Ventures Inc. (Re.), 2026 NSSC 292, reasons dated September 21, 2026, Justice John A. Keith found the debt-assumption transaction was the best available outcome while refusing to leave the disputed art entirely to private negotiations.

The ruling concerns a transaction with New Tide Capital LP, an affiliate of the HPS secured creditors. The asset purchase agreement quantified CFFI’s debt at US$1.12 billion as of March 13, 2026. The proposed buyer would assume indebtedness or liabilities rather than pay cash.

Sale process produced no qualifying alternative

CFFI obtained protection under the Companies’ Creditors Arrangement Act in March. FTI Consulting Canada Inc. was appointed monitor, and the court later approved a sale and investment solicitation process.

The process canvassed 159 potential purchasers, but no qualifying offer emerged. Justice Keith accepted the monitor’s assessment that the process was fair and adequately tested the market. The principal secured creditors had been consulted and did not oppose the transaction.

The court found the debt being assumed substantially exceeded the value assigned to the transferred assets. Unsecured creditors would receive no recovery, but the judge concluded that bankruptcy would not improve their position.

The portfolio covered equity interests in companies including Skinfix Inc. and businesses in the Horizon Maritime group, along with receivables, tangible property and other assets. CFFI’s interest in Cormorant Utility Services Limited was carved out of the initial transfer because SFPC Quantum LP held first-ranking security over those shares ahead of HPS.

The Cormorant interest could be transferred later if the relevant debt was repaid or refinanced, Quantum consented, or the court authorized the transfer. Justice Keith found that arrangement reasonably accommodated the competing interests without deciding the disputed transfer question prematurely.

Approval came with closer scrutiny of the art

The more difficult issue involved artwork listed as CFFI’s property in its books and records. Risley, the company’s principal directing mind before the restructuring, claimed that certain pieces belonged to him through personal purchases or gifts.

The court described earlier negotiations over separating corporate artwork from pieces claimed by Risley. The proposed allocation was not formally documented and remained subject to continuing negotiations and possible approvals.

By the monitor’s August report, 669 pieces were in dispute and proposed to be allocated to Risley personally, out of a collection of 1,281 works. They included works by Group of Seven artists and more than 90 by Nova Scotia artist Maud Lewis. The judge said he lacked evidence explaining the changing allocation or the values of the pieces claimed by Risley and those that would remain with CFFI.

The court also noted that CFFI’s unaudited financial statements recorded approximately $8.1 million in net book value for artwork, antiques and collectibles at the end of 2025. That was small relative to the company’s wider debts, but Justice Keith considered it substantial enough to require meaningful oversight.

The proposed order would have preserved Risley’s right to claim ownership and brought disputes back to court. Justice Keith was concerned that it otherwise allowed the parties to divide the collection by agreement without giving the court an account of how they had resolved the competing claims.

He did not decide who owned the disputed works. Instead, he required New Tide to provide the monitor with a full account of any private resolution, its legal and practical basis and any reasonably available valuation or financial information informing it. The monitor would then report to the court with its observations.

The formal sale approval and vesting order issued September 28 sets the timetable: the purchaser must provide its artwork report within 21 calendar days of a settlement or resolution of discussions with Risley, and in any event by November 27, 2026. The monitor must send it to the court within 14 calendar days of receipt, unless the court permits additional time.

Contractual waivers and continued supervision

The court also approved transaction-specific relief from contractual and organizational restrictions that could block or delay the sale, including transfer restrictions and rights of first refusal. Justice Keith found the relief necessary to implement the restructuring. The reasons emphasize that, after closing, the purchaser would remain bound by the restrictions that otherwise applied to CFFI.

For the sale analysis, the parties agreed that the court should apply the heightened standard used for related-party transactions. HPS and New Tide did not concede that they were related parties beyond that motion.

The stay of proceedings was extended to December 18, 2026, and the monitor received expanded powers to administer CFFI’s remaining affairs after closing, when the company was expected to be left without employees or directors. The formal order makes the transfer of assets effective on delivery of the applicable monitor’s certificate.

The result allows the restructuring transaction to proceed while preserving oversight of an unresolved ownership dispute. Approval of the asset sale does not establish Risley’s title to the artwork or approve a future private allocation in advance.