Lawyer: Better to let Laurentian ‘go bankrupt’ than court approving motion putting it in ‘impossible situation’

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Lawyer: Better to let Laurentian ‘go bankrupt’ than court approving motion putting it in ‘impossible situation’

The University of Sudbury attorney opposes a $ 10 million loan term that requires the termination of LU’s agreement with three federated universities

A lawyer representing the University of Sudbury says we are “better off” if Laurentian University goes bankrupt if the only thing preventing it is the courts, which “approve disclaimers that should never be approved” .

It was the turn of the University of Sudbury to speak out in a court hearing on April 30th against Laurentian University’s plans to terminate or reject an agreement dating back more than 60 years that dates back to the university’s inception.

Laurentian, who shocked the community when it said it was bankrupt this winter, has been under judicial scrutiny for the last three months under the Companies Creditors’ Arrangement Act (CCAA).

She has spent the past two days in court on issues related to her restructuring plans, including massive program and job cuts recently announced by the university.

Another plan is to end the 1960 federation agreement with the three federated universities operating on campus – the University of Sudbury, Huntington University and Thorneloe University.

Thorneloe University, which said the situation would accelerate its bankruptcy, spoke out against Laurentian’s plan to terminate the federation agreement at a hearing before Chief Justice Geoffrey Morawetz on April 29.

The Sudbury University matter was heard by Justice Cory Gilmore on Friday. The hearing was bilingual, with the participating Anglophones being translated from French to English.

A decision on both matters is expected to be released late Sunday.

(For its part, Huntington has entered into an interim agreement with Laurentian that includes LU’s purchase of the popular gerontology program and is not fighting LU’s actions in court.)

Laurentian is seeking an additional $ 10 million in debtor-in-possession (DIP) on top of the $ 25 million already borrowed. With these funds, there will be enough money to survive the rest of the spring and summer.

The university’s spring semester is supposed to start on Monday. Whether or not these classes take place depends on whether LU secures more DIP funds and whether the court approves the restructuring.

One of the conditions attached to this $ 10 million DIP from lender Firm Capital Mortgage Fund Inc. is the termination of the contract with the three federated universities.

Both the University of Sudbury and Thorneloe are questioning the terms of the loan.

Ronald Caza, lawyer for the University of Sudbury, said Friday that the terms of the DIP loan placed the courts in a bad spot, comparing the DIP lender at one point to the “tail wagging the dog”.

“We are in an impossible situation some would say,” he said. “This is an improper use of the disclaimer. You have no choice but to let it happen because if you don’t, Laurentian University will go bankrupt.

“I think we are telling you this: The credibility of our entire bankruptcy and bankruptcy system rests on the public believing that decisions are made in accordance with the application of the law, not because we are intimidated or coerced into DIP lenders who will begin to dictate terms that include accepting disclaimer notices that should never be accepted.

“We’re better off if Laurentian University goes bankrupt. If that is the result, we will go bankrupt. If the only thing stopping them from going bankrupt is for the court to approve disclaimers that should never be approved because they are unfounded and they are wrong. “

Laurentian views the termination of the Federation Treaty as a source of untapped revenue. It is said to have transferred $ 7.7 million in 2020 to the three federated universities that offer courses that apply to Laurentian degrees.

The university wants to keep these funds to itself by redirecting students taking courses at the three federated universities to Laurentian courses instead.

The University of Sudbury was forced to cancel all of its spring courses because Laurentian wanted to end the association.

The federated university announced plans to become a Francophone-only university last month (before Laurentian’s announcement) and actually demanded – unsuccessfully – that Laurentian transfer all of his French courses to the Sudbury University list.

“We have a university that has asked to end its relationship with the federated universities for the sole reason of stifling them,” said Caza, calling the situation a “money robbery.”

Raising concerns under the French Language Services Act, Caza said Laurentian had cut 40 percent of his French courses and if that weren’t enough to slap the face of the Francophone community, it would cut the university from Sudbury’s ability to speak Francophone as well To offer courses.

Laurentian University attorney DJ Miller reiterated Laurentian’s commitment to his bilingual and tricultural mandate, even in the face of the cuts.

She also referred to Caza’s statement that LU “going bankrupt” was preferable to courts allowing termination of the Federation Agreement as “exceptional,” adding that she had never heard of anything like this in CCAA proceedings.

Miller said if Laurentian ceased to exist it would mean 9,000 students would be evicted.

The DIP lender just wants to make sure it gets paid back.

“This isn’t a case where the DIP lender took the plunge and the university said how high it is and issued disclaimers,” Miller said.

“It is the case that in a scenario where you have an unsustainable financial model, the university cannot pour $ 7.7 million to teach students in programs and courses that are Laurentians and Laurentians have the ability, the ability and the ability to teach. “