Creditor approval allows the institution to approach the end of the restructuring process.
A majority of Laurentian University’s (UL) creditors on Wednesday approved a plan of arrangement that allows the institution to near the end of the restructuring process under the Companies Creditors Arrangement Act (CCAA). Creditors with a secured claim, who were unable to vote on Wednesday, will be paid in full, while unsecured creditors will receive only a portion.
« We have given ourselves the opportunity to redefine UL and together write a brighter new chapter marked by transparency, collegiality and accountability, » reacted Jeff Bangs, Chairman of the Board of Governors of the University. Laurentian University. “As the long and painful CCAA process draws to a close, we can finally begin the work of restoring the integrity of our university,” commented Fabrice Colin, President of the Association of University Professors. Laurentian University (APPUL).
The vote had a monumental impact on the future of the bilingual university in northern Ontario. The controller in the proceedings, the firm EY, had allowed the total liquidation of the establishment’s assets and its closure to be contemplated if the creditors voted against the plan of arrangement. To pass, the plan had to have the support of a majority of unsecured creditors whose claim was approved by the monitor; their vote also had to represent at least two-thirds of the total value of the claims.
This means that the vote of two banks — the Royal Bank of Canada and the Toronto Dominion — was crucial for the university. In May 2021, in court, a lawyer from Laurentian University, DJ Miller, claimed that the establishment owed them more than 100 million dollars. Like the other creditors who were able to vote on Wednesday, the banks will only receive a payment representing between 14.1% and 24.2% of the amount of their claim. Only a small group of creditors will be paid in full.
The university will be able to pay its proven creditors — which includes university employees and professors laid off in 2021 — through the sale of its real estate. The Ontario government will acquire assets for a minimum price of $45.5 million and a maximum price of $53.5 million. Under the plan of arrangement, the university will make all of its real estate assets available for purchase.
Laurentian University took shelter from its creditors in February 2021 since it was then facing debts of more than $180 million; the amount of creditors’ claims has since approximately doubled, partly due to compensation claims from former employees.
Proceedings under the CCAA allow companies to avoid bankruptcy, continue their activities and find a way to repay their creditors. The adoption of a plan of arrangement is one of the last stages of the process: it provides in particular for the payment of certain sums to the creditors.
Now that the plan has been adopted, the establishment will seek approval of the plan from the court on October 5. Once approval is obtained, implementation of the plan can begin. Within two months of court approval, the university will issue a tender for a consultant to lead the restructuring of operations recommended by the firm Nous in March 2022.
The plan had the support of the two major unions at the university: the Laurentian University Employees Union (SEUL) and the Association of Professors of Laurentian University (APPUL). SEUL President Tom Fenske recommended that its members vote in favor of the plan.
In interview with The duty on Tuesday, the president of APPUL, Fabrice Colin, affirmed that his union fought “tooth and nails for the plan”.
A group of employees, the Tricultural Committee for University Education in Sudbury, which includes several former professors, of the establishment opposed the plan. According to David Leadbeater, a representative of the group, two-thirds of the creditors who voted on Wednesday were active or former employees; nearly 20% of them were laid off, but they are owed about 80% of what is owed to employees. “The idea that restructuring is a good way to revitalize the university is wrong,” says David Leadbeater.
Ontario Auditor General Bonnie Lysyk criticized Laurentian’s decision to resort to court-protected restructuring in a preliminary analysis in April. « The University has departed from the usual BPS precedents in making a comprehensive and clear effort to seek financial assistance from the Ministry of Colleges and Universities, » she wrote. A more detailed report is expected in the coming months.
This story is supported by the Local Journalism Initiative, funded by the Government of Canada.
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