Secured creditor fails to carve out assets from SISP

CFFI Ventures Inc. (Re.), 2026 NSSC 195
What assets should be included in a SISP?

Summary: The Nova Scotia Supreme Court has approved a sale and investment solicitation process for CFFI Ventures Inc., rejecting an argument by the first-ranking secured creditor that CFFI’s shares in Cormorant Utility Services Limited should not be included in the SISP and should instead form part of a separate strategic process led by Cormorant. The Court rejected that alternative, finding that an undefined promise of greater flexibility was insufficient to justify delay, could diminish the monitor’s role and offered no clear evidence of a better outcome. It concluded that the proposed SISP was fair, transparent and commercially efficient, would expose CFFI’s assets to the market in an orderly manner and was more likely to maximize value for stakeholders than a standalone process.

The CCAA applicant, CFFI Ventures Inc. (“CFFI”), was a holding company which owned artwork and a range of equity investments. Its assets were encumbered by certain security interests, including those of certain parties collectively referred to as “the HPS Creditors”. The HPS Creditors had a security interest in all of CFFI’s (or its affiliate guarantors’) present and after-acquired personal property and interest in capital stock, subject to some exclusions. That interest secured CFFI’s obligations under a Note Purchase and Guarantee Agreement between CFFI, the HPS Creditors as agent and lead arranger, and certain secured creditors.

With one notable exception related to CFFI’s equity interest in a company called Cormorant Utility Services Limited (“Cormorant”), the HPS Creditors were the senior secured lenders, holding first priority in all of CFFI’s assets and undertakings. Their debt had accrued to between $790 million and $1.118 billion USD as of March 13, 2026. CFFI’s asset value, meanwhile, was estimated at about $337 million CDN.

CFFI sought approval of a Sale and Investment Solicitation Process (“SISP”) or full liquidation of its assets. The proceeds of this sale would then be distributed among CFFI’s creditors in accordance with their respective interests and priorities. A dispute arose over how the SISP process should be structured and what assets should be included in that SISP.

SFPC Quantum LP (“Quantum”) advanced funds to Cormorant, which debt was secured by a guarantee from CFFI. CFFI’s guarantee obligations were secured by Quantum’s security interest in all securities owned or at any time acquired by CFFI in the capital of Cormorant. Pursuant to a Subordination Agreement, HPS agreed to subordinate its security interest in the Cormorant collateral to Quantum’s security interest. As a result, Quantum stood in first position with respect to CFFI’s equity interest in Cormorant, but was subordinate to HPS with respect to all other collateral.

Quantum opposed the inclusion of CFFI’s Cormorant shares among the assets and property to be marketed pursuant to the proposed SISP. Instead, Quantum proposed a “standalone strategic process” separate from the SISP “to explore a broader range of transaction alternatives beyond only CFFI’s interest in Cormorant.” Ultimately, the dispute pitted a debtor advocating for a comprehensive, court-supervised, market process designed to maximize value against a secured creditor seeking to protect its first-ranking priority rights and resist a process that it said may constrain the realization of value for that particular asset.

The Monitor generally described the SISP as appropriate, reasonable and structured to maximize value through a controlled, competitive market process. The Monitor noted that any viable transaction must address the substantial indebtedness owed to the HPS Creditors. Therefore, the SISP was structured so that Qualified Bids must provide sufficient consideration, either individually or collectively, to repay the HPS debt (or such lesser amount as they accept), and the inclusion of a potential credit bid by the HPS Creditors was a necessary feature to ensure that the estate would receive at least the value that the HPS Creditors were prepared to attribute to the assets if no superior third-party offers were obtained.

The Court noted that the CCAA has evolved beyond its historic emphasis on restructuring and rehabilitation to include court-sanctioned liquidations where they better serve stakeholder interests and achieve the statutory purposes. Overall, the evolution of a liquidating CCAA process is understood as a natural extension of its defining characteristic: a flexible, pragmatic, court-supervised regime capable of tailoring outcomes to the realities of each insolvency. This was germane here because, to the extent CFFI had a “business”, it held artwork and equity positions in other operating companies. Thus, it made sense that CFFI sought to liquidate its assets. It was not proposing to emerge from these proceedings as a rehabilitated operating entity.

A court “should ensure that the process being proposed is fair, transparent, commercially efficient, cost-effective in the circumstances, and preserves the integrity of the CCAA process”, and further, the court should consider whether “all parties to the process are acting in good faith and with due diligence”. When considering whether there is a bona fide reason to object: “the Court may consider and weigh all of the affected interests. Where there are numerous affected stakeholders, an individual creditor’s preferences or demands may not necessarily represent an enforceable objection”. As to a viable alternative, the question is, in “very simple terms: does any person have a better idea? Is bankruptcy more beneficial?”

Here, the Court was satisfied that the proposed SISP was warranted and aligned with the considerations included in s. 36 of the CCAA. CFFI was buckling under staggering debt that was growing and far exceeded its financial worth. Any further delay would not be in the interest of any party, and there was appreciably more benefit to be gained by exposing CFFI’s assets to the market. The proposed SISP process was fair and transparent, particularly as it provided for the sharing of information and the obligation to consult not only the HPS Creditors but Quantum as well. The Court was satisfied that CFFI’s assets would be exposed to the broader market in an orderly and timely manner, and accepted the Monitor’s view that the type of approach being proposed would stimulate (not dampen) interest and foster a robust bidding process.

Quantum’s arguments were largely built around the conviction that its proposed alternative, where Cormorant would be tasked with developing a sale or restructuring plan, was superior to the SISP insofar as Cormorant shares were concerned. However, greater flexibility in developing a plan to maximize value only becomes a strength where there is some visibility around how this flexibility will be used and how it will yield a result that achieves the goals and objectives of the CCAA. Sincerely held optimism around a yet-to-be formed plan (or the elusive promise of a better plan) is insufficient, and only risks further uncertainty and delay.

The alternate “standalone” suggestion regarding CFFI’s shares in Cormorant also stood to diminish the Monitor’s role. The Court would be rendered somewhat blind and deaf, at least when compared to what would occur under the SISP. Instead, Cormorant (which was not an officer of the Court) would assume a more dominant role. Plans that would diminish the Monitor’s role should be approached with a degree of healthy caution. The Court approved the proposed SISP.

Judge: The Honourable Justice John Keith

Professionals involved:

• Stephen Kingston, Ben Pryde and Hilary Gilroy of McInnes Cooper for the Applicant, CFFI Ventures Inc.

• David Rosenblat, Gavin MacDonald and Marc Wasserman of Osler for the HPS Creditors

• Natasha MacParland of Dentons and Joshua Santimaw of BoyneClarke for Brendan Paddick

• Caitlin Ward for the Department of Justice

• Robert Chadwick and Jennifer Linde of Goodmans for SFPC Quantum LP

• Maria Konyukhova and Nick Avis of Stikeman Elliott for the Monitor, FTI Consulting Canada Inc.

• Michael Shakra of Bennett Jones for Cormorant Utility Services Limited