NordStar Capital owners Paul Rivett and Jordan Bitove entered into arbitration Wednesday after mediation talks failed to resolve a fractious dispute between the two former business partners, according to three people familiar with the matter, as the duo seek to divvy up assets that include the Toronto Star newspaper.
Mr. Rivett and Mr. Bitove held two mediation sessions in late October, after Mr. Rivett went to court claiming he and his partner were deadlocked and could no longer work together. He asked the court to dissolve NordStar, a private equity firm in which they are equal partners, and proposed an auction process for splitting up its assets. At a brief hearing on Oct. 3, lawyers on both sides agreed to resolve the matter outside of court and pursue mediation and arbitration, which is conducted privately.
Mr. Rivett and a spokesperson for Mr. Bitove declined to comment.
Even with the assistance of a mediator, the sources say the two owners have so far been unable to agree on how to split up NordStar’s assets, which also include Metroland Media Group and investment stakes in VerticalScope Holdings Inc. FORA-T and Blue Ant Media Inc. The final outcome could now be in the hands of arbitrator J. Douglas Cunningham, a former justice with the Ontario Superior Court.
The Globe and Mail previously reported that Mr. Rivett and Mr. Bitove hoped to resolve the matter by the end of the year. The Globe is not identifying the sources because they are not authorized to speak publicly.
One complicating issue has been the sharp drop in the share price of VerticalScope, a digital media company that operates some 1,200 online communities. NordStar owns a 37-per-cent stake in VerticalScope, which went public last year, and the value of its shareholding hit more than $260-million in September, 2021. It has since fallen to roughly $47-million amid a deep rout for technology stocks.
Mr. Rivett and Mr. Bitove partnered in 2020 to purchase Torstar Corp., the parent firm of the Toronto Star, for $60-million, and pursued new revenue streams to fund journalism, such as launching an online casino and sportsbook when Ontario opened the market to private operators this year.
But the relationship quickly unravelled, as detailed in a court application Mr. Rivett filed in September through companies he controls. He claimed he and his partner had agreed on cost-cutting measures, but Mr. Bitove refused to carry out the plans at the Toronto Star, where he also serves as publisher.
Mr. Bitove also allegedly refused to provide financing for some of NordStar’s early-stage ventures, and reneged on an agreement to sell real estate assets to pay down debt.
As the disagreements deepened, Mr. Bitove attempted to sideline his partner by moving to appoint himself to the boards of various subsidiaries in a bid for greater control, according to the court application.
After The Globe reported on the court filing, Mr. Bitove responded with a statement through communications firm Navigator Ltd., saying he would make no apologies for his decisions at the Toronto Star, while implying Mr. Rivett preferred to “cut costs to the bone.”
Despite the apparent animosity between them, the former partners are scheduled to appear on stage together Thursday evening as part of a panel discussion following the screening of a documentary about the Toronto Star. The film, titled Viral News and produced by TVO, follows the newspaper during a COVID-19 pandemic lockdown and features interviews with Mr. Rivett and Mr. Bitove before their public split.