Skip to content

Insolvent Laurentian says it’s drawing less on its $35M bridge loan than expected

University progressing through milestones of court-supervised restructuring ‘in an encouraging manner’
robert_haché_headshot
Laurentian University president Robert Haché. (Supplied)

Laurentian University is progressing through the milestones of its insolvency restructuring “in an encouraging manner,” and is “tracking ahead” of its original projections when it comes to cash flow.

Those were the messages Laurentian president Robert Haché gave members of the university’s senate at their June 15 meeting.

Haché said Laurentian is “drawing less on external financing than originally expected at this time.” He was referring to the $35 million in bridge financing the school borrowed as part of its insolvency court filing through the Companies’ Creditors Arrangement Act (CCAA).

He said while this is a “positive development,” and reflects the care LU has taken with respect to spending, “it also reflects an opportunity to maintain those good practices going forward so we can get out of this process in the best possible shape.”

Laurentian English professor Ernst Gerhardt said he was happy to hear the university is doing better than expected on cash flow, although he pointed out the court-appointed restructuring monitor, Ernst & Young, has reported this previously.

He wondered if Haché meant that Laurentian was doing “even better than expected.”

The Laurentian president replied that the situation is “not exceptional in terms of the cash flow analysis. There hasn’t been necessarily a big jump, but it is incremental.”

Haché said it’s important for the community to understand that the $35-million debtor-in-possession (DIP) loan is the only external money Laurentian will receive until the CCAA court process is completed, which is expected by the end of 2021.

“And so having that money carry through to the end of the year is what needs to happen,” Haché said.

“Right now, we are in a relatively good position with respect to achieving that. The No. 1 variable is fall enrolment, of course, because that is the single biggest cash flow into the university during the course of the year.

“And so we will get through the summer, is what I’m expressing optimism in, and if we achieve our enrolment targets for the fall, we will be set on the path to completing the year.”

Laurentian University Staff Union (LUSU) president Tom Fenske also commented on the cash flow situation, asking what happens to the funds if there are surpluses.

“Do they go back to the programs?” he asked. “Are they captured by creditors? Are people going to be recalled? I would just like to know.”

Haché said at the end of 2021, Laurentian will have to reach a “plan of arrangement” with its creditors, and that plan is going to be predicated on the ability of the university to have at least balanced budgets and make restitution to its creditors.

“I don’t mean to be vague with the answer, but at the present time it’s difficult to give you a precise answer,” he said.

“In terms of will this immediately provide funds for reinvestment, I honestly don’t know the answer to this at this date.”

Turning to the fall, Haché said enrolment is going to be crucial to Laurentian’s future. He said that given the uncertainty of the CCAA process, LU has been expecting impacts on its fall enrolments.

“It would not have been realistic to expect otherwise,” he said, adding that Laurentian is doing “everything possible” to reach out to students who have expressed an interest in LU, and bring them onto campus in the fall. 

Haché said registration has yet to open, but in terms of confirmations from students, those numbers are down over last year, although he pointed out it’s equal between English and French-language programs.

“Which I think is taken as a further reinforcement that Francophone students are still looking to Laurentian for their future,” he said.

Applications for residence are well above what was expected as Laurentian plans for a return to in-person classes this fall with the COVID-19 pandemic looking to be better under control in Ontario.

Haché said it’s impossible to make an accurate prediction on fall enrolment at this point, but “it does look like we have a realistic chance of meeting our budgetary expectations on enrolment at the very least.”

After declaring it is insolvent Feb. 1,  Laurentian is currently in Phase 2 of the CCAA process, after a first phase that included massive cuts to programs and employees, as well as the severing of the six-decade-old agreement with the federated universities operating on campus.

Haché brought members of the Senate through what they can expect next as part of Laurentian’s insolvency proceedings.

“We do continue to work through the process in an encouraging manner,” he said. “I say encouraging because we continue to be on track, it seems, in achieving the milestones that were set out for us in Phase 2 of the process, which of course takes us until the end of August.”

That includes assembling a creditors’ list, a review of Laurentian’s real estate holdings and a governance review. 

Lou Pagnutti, a Laurentian graduate with extensive relevant experience, has been appointed by the courts as chief redevelopment officer as LU proceeds through the CCAA process.

While creditors are being asked to submit their claims by the end of July, Haché clarified that Laurentian’s former employees are going through a separate process for compensation they are owed.

“Former employees of the university will not have to submit anything directly in the context of this particular phase of the process, but there will be a separate process to ensure they are dealt with appropriately,” he said.

During the senate meeting, Haché was questioned by psychology professor Josée Turcotte about his recent appearances before House of Commons committees.

Referring to questioning by the NDP’s Charlie Angus, Turcutte wanted to know how forthcoming Haché was about Laurentian’s financial situation with the feds at the end of 2020, and how it came to be that LU did not receive the funding it needed to avoid insolvency.

“I was extremely forthcoming on the provincial side and the federal side with the officials and politicians that we met with in terms of the financial situation of the university,” Haché said.

“And unfortunately everyone knows this, we were not successful on receiving a level of support or offers of support that would have prevented the CCAA filing, otherwise we would have absolutely not proceeded in this manner. This was absolutely a decision of last resort.”



Comments


Heidi Ulrichsen

About the Author: Heidi Ulrichsen

Read more