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

The artworks claimed by John Risley include pieces by Group of Seven artists A.Y. Jackson, J.E.H. MacDonald and Arthur Lismer, as well as over 90 works by Nova Scotia folk artist Maud Lewis. Photo by Aaron McKenzie Fraser/PRNewsFoto/Cunard Line

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

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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.

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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.

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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.

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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.

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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.

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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.

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

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The works claimed by Risley include pieces by Group of Seven artists A.Y. Jackson, J.E.H. MacDonald and Arthur Lismer, as well as more than 90 works by Nova Scotia folk artist Maud Lewis.

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The ownership dispute stems in part from the way CFFI historically recorded spending. The monitor previously said the distinction between CFFI’s corporate expenses and Risley’s personal expenses was at times “not strictly maintained.”

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Negotiations over the artwork led to a “general agreement” that artwork purchased before July 1, 2004, along with certain works gifted to Risley, would belong to him, while works purchased after that date would go to CFFI. But the arrangement was never formally documented and remained under negotiation.

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Keith said the court had little information about how Risley’s claims arose, who was involved in the discussions or what approvals might be required to finalize the agreement.

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He also said that even the lowest value for the collection before the court — an $8.1-million book value recorded at the end of 2025 — was significant.