Seafood billionaire John Risley’s firm faces huge debt, legal battles amid ownership shakeup

“Change is inevitable and I believe this is the right path for the future,” Risley, CFFI’s chair and chief executive, said in a release on Tuesday. Photo by Aaron McKenzie Fraser/PRNewsFoto/Cunard Line/Postmedia files

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An investment firm led by seafood billionaire John Risley is facing debts topping US$776 million and tens of millions of dollars in legal claims as it seeks protection from creditors and prepares to transfer ownership, according to court documents.

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Halifax-based CFFI Ventures Inc. secured a preliminary court order granting temporary protection from creditor claims while it works to restructure hundreds of millions of dollars in secured debt and other obligations. The interim order imposes a stay of proceedings until a follow-up hearing on Feb. 27, when the company is expected to seek an extension of its asset protection and approval for subsequent steps.

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The firm sought the order without notifying creditors — an “ex parte” application — saying that advance notice could trigger enforcement actions that might derail its restructuring.

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In a 493-page affidavit, CFFI chief financial officer Brittany Bartlett said the temporary relief was critical to stabilize operations, adding that the company “does not believe its assets can be monetized in the near term” and that current values are insufficient to cover total liabilities. The stability is to ensure the company can present a plan of arrangement to its creditors in an orderly, fair process.

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Under the proposed plan, most of CFFI’s assets would move to a new entity, AcquireCo, controlled by HPS Investment Partners LLC and other secured creditors through a holding company called New Holdco.

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HPS’s secured claim alone, under a note purchase and guarantee agreement dating to 2017, totals roughly US$777 million, not including interest, according to the filings. CFFI also said it had roughly $371 million in unsecured liabilities, including more than $331 million in disputed Canada Revenue Agency tax assessments.

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CFFI’s assets include stakes in skincare brand SkinFix, marine services company Horizon Maritime Service Ltd. and an interest in a proposed wind-powered hydrogen project in Newfoundland. It is also a part owner of several other ventures.

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CFFI said it had filed a plan in Nova Scotia Supreme Court to move its assets to a new owner as part of a debt restructuring aimed at restoring financial stability. A judge is expected to decide in April whether to approve it.

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“Change is inevitable and I believe this is the right path for the future,” Risley, CFFI’s chair and chief executive, said in a release on Tuesday. “I have a higher tolerance for risk than most, which has driven the success and some setbacks experienced since founding Clearwater Fine Foods Inc. (CFFI’s predecessor) in 2003.”

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Justice John Keith said the plan of arrangement is complex, covering all creditors — including “convenience” or unsecured small creditors — and involves significant assets and debts, similar to a formal insolvency process.

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“Complexity; urgency; high stakes in terms of value and debt; and issues that border on insolvency are certainly not uncommon in these types of plans of arrangement,” he said in his decision to grant CFFI its temporary protection from creditors.