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Judges refuse Thorneloe appeal of Laurentian’s severing of agreement with federated universities

Panel of judges ‘simply not persuaded’ there’s a basis for interfering with May 2 court decision
ThorneloeUniversityWinter2020_1Sized
Thorneloe University.

A panel of three judges has refused Thorneloe University’s appeal of a May 2 court decision that allowed Laurentian University to terminate the more than 60-year-old agreement with the three federated universities operating on campus.

Thorneloe filed the notice of motion to appeal the ruling on May 3, just a day after it was issued.

Thorneloe University, along with the University of Sudbury, fought the “disclaimer” or severing of the federation agreement in court, while Huntington University, which had come to an agreement with Laurentian, did not.

Laurentian said it needs the roughly $7 million per year that is transferred to the federated universities, which offered classes that counted toward Laurentian degrees, to cover its own costs.

As is widely known, Laurentian University declared this past winter it is insolvent, and has undertaken restructuring under the Companies’ Creditors Arrangement Act (CCAA).

As part of its CCAA filing, Laurentian was seeking a further $10-million debtor-in-possession (DIP) loan this spring, bringing its total in DIP loans to $35 million.

One of the conditions of this further $10-million DIP loan was the severing of the agreement with the federated universities, a condition to which Thorneloe and the University of Sudbury took exception.

All three federated universities have cancelled their spring classes due to the situation (although Thorneloe continues to offer theology classes, as its theology degrees are conferred directly by Thorneloe).

The lawyer representing Thorneloe University in court, Andrew Hatnay, said during April court proceedings that Laurentian will gain “relatively nickels” by terminating the federation.

Thorneloe, on other other hand, Hatnay said, will be bankrupted by the situation, which he said will be “catastrophic” for the federated university.

The three judges with the Ontario court of appeal, Alexandra H. Hoy, Sarah Pepall and Benjamin Zarnett, issued their refusal of Thorneloe’s appeal June 23.

They said that they are “simply not persuaded” that there is an “arguable basis” for interfering with the “factual findings or legal conclusions” brought forward by Chief Justice Geoffrey Morawetz in his May 2 decision.

“The CCAA judge expressed the choice succinctly and accurately — it was between allowing the disclaimer, recognizing the hardship it would cause Thorneloe, and disallowing the disclaimer, recognizing the hardship it could cause Laurentian and Thorneloe,” said the court of appeal judges.

“In our view, the choice he made cannot be faulted. We would also observe that this conclusion was available in the absence of any consideration of the position of the DIP Lender. 

“In conclusion, while we recognize the serious financial implications of the disclaimer for Thorneloe, we are simply not persuaded that there is an arguable basis for interfering with the CCAA judge’s factual findings or legal conclusions.”

The court of appeal judges also said that in their view, there is a risk that an appeal would be a distraction from Laurentian’s restructuring efforts.

“Laurentian and the DIP Lender also raise legitimate concerns that attempting to ‘unscramble the egg’ through an appeal would unduly hinder the progress of the CCAA proceeding,” said the judges.

We’ve reached out to Thorneloe University for comment on the decision, but had not heard back as of this article’s publication.



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