John Risley

’s CFFI Ventures Inc. will remain under court protection after a judge approved an extension of a stay of proceedings, but raised questions about the company’s value and $1.4-billion debt.

At a hearing on Monday in the Nova Scotia Supreme Court, Justice John Keith extended CFFI’s stay under the Companies’ Creditors Arrangement Act (CCAA) until May 29, allowing the

restructuring

to continue while a court-appointed monitor conducts further analysis. The stay prevents creditors from taking enforcement action as the case moves forward.

Keith directed the monitor, FTI Consulting Canada Inc., to assess CFFI’s asset values, examine its debt and clarify creditor claims before further decisions are made in the restructuring.

At the centre of the case is a proposal that could see CFFI’s largest secured lender, New York-based HPS Investment Partners LLC, take control of the company’s assets as part of a restructuring. The firm is owed roughly $1 billion, according to court filings.

A prior fairness opinion prepared by Ernst & Young said the proposed deal was reasonable since CFFI’s $367 million in assets were roughly equal to the debt HPS would take on, so creditors would be no worse off than if the company were liquidated.

CFFI holds investments across industries such as energy, space technology and skincare.

But several creditors raised concerns during the hearing about both the valuation of CFFI’s assets and the way the debt has been calculated and that those assumptions could materially affect the outcome. If the assets are worth more than previously estimated or if the debt is disputed, it could change how much value is available to other stakeholders.

Those stakeholders include Risley’s longtime business associate, Brendan Paddick, who is suing CFFI over an unpaid $23-million loan, and the

Canada Revenue Agency

, which says CFFI owes it $331 million — a claim the company disputes.

Some parties also called for broader scrutiny of the restructuring process itself, including how the debt is structured, the extent of HPS’s influence over the company and whether a formal sale process should be launched to test the market value of the assets.

But Keith said the monitor has to complete its work first.

“I don’t want to pin the monitor down. I have to depend on the monitor’s judgment,” he said during the hearing, adding that the court will rely on the monitor’s findings before addressing competing claims.

The monitor said it will need time to review documents across CFFI’s portfolio and engage with stakeholders before reporting back to the court. In the coming weeks, the monitor will define its scope of work, review CFFI’s assets, debt and creditor claims and report back before the court moves to the next stage of the restructuring.

The restructuring plan covers most of CFFI’s businesses, which are now protected from creditors under the stay. However, one of its companies, World Energy GH2 Inc., is being handled separately through an insolvency case in Newfoundland and Labrador and is not part of this restructuring.

The court also approved an increase in the restructuring’s administrative charges to $400,000, from $250,000, reflecting the growing scope and cost of the process.

CFFI previously pursued a restructuring plan under Nova Scotia’s Companies Act last month that would have transferred assets to a group affiliated with its main lender, but that plan was abandoned amid creditor opposition. The current CCAA process provides greater court oversight and broader participation for creditors.

Risley is one of Atlantic Canada’s most high-profile business figures, known for building and investing in companies across seafood, energy and finance. He co-founded Clearwater Fine Foods Inc., which was sold for $1 billion, and Columbus International Inc., a Caribbean communications company that sold for US$1.85 billion in 2014.

Court filings said the HPS loan started at US$250 million in 2017 and reached nearly US$1 billion after interest accrued when CFFI stopped making payments. To help reduce its debt, CFFI has been selling valuable assets such as artwork and private aircraft.

  • John Risley risks losing control of CFFI Ventures with assets, value under scrutiny in restructuring
  • John Risley’s CFFI Ventures moves $1.4-billion debt restructuring to Federal Court after creditor pushback

• Email: arankin@postmedia.com