After further negotiations with Laurentian University, the union representing the insolvent university’s faculty is now recommending its members and former members vote in favour of the plan to pay off LU’s creditors.
Laurentian continues to undergo court-supervised restructuring after declaring insolvency in February 2021, and filing for creditor protection under the Companies’ Creditors Arrangement Act (or CCAA).
Laurentian’s creditors will vote on the “plan of arrangement,” in which the university lays out how it plans to pay them back, on Sept. 14. Provided the plan of arrangement is approved, the university expects to seek a court motion to exit insolvency on Oct. 5.
A plan of arrangement is essentially a plan put forward by an insolvent organization to pay out its creditors, and it must be approved by these creditors.
Among LU’s creditors are current and former employees of the university, including those who were terminated in 2021 as a result of Laurentian’s insolvency.
An Aug. 4 memo distributed to members of the Laurentian University Faculty Association (LUFA) said electronic ballots will be distributed this month for members to vote on the plan of arrangement, and voting will take place over several weeks.
However, the union said several issues related to the plan of arrangement remained outstanding and must be addressed “before we can recommend a ‘Yes’ vote.”
A follow-up memo was issued by LUFA on Aug. 15, in which the union said it is now in a position to recommend that members vote in favour of the plan of arrangement.
The Laurentian University Staff Union (or LUSU), another union representing Laurentian employees, already told Sudbury.com earlier this month it was recommending members vote in favour of the plan of arrangement.
LUFA said it has secured a few more commitments from Laurentian which has allowed the union to make its recommendation.
One is related to governance reform. Laurentian, along with LUFA, will jointly request the provincial government make legislative changes to allow faculty to be appointed to the board of governors as voting members.
The university also plans to add three new tenure-track faculty members in 2023, “with the understanding that LUFA will continue to advocate for increased complement.”
More than 100 faculty members were terminated at Laurentian last year as part of the university’s insolvency restructuring, and another 20 professors have left the university since that time.
As announced last month when the plan of arrangement was released, a pool of cash of up to $53.5-million for Laurentian’s creditors is to come from the sale of university real estate to the province of Ontario, as per an agreement this spring with the province. The minimum floor for the pool of cash has been set at $45.5 million.
Except for some classifications of creditors who will be paid out in full, court filings have provided creditors with an estimate of a 14.1- to a 24.2-per-cent recovery on what they’re owed.
In the event the plan is not approved, and Laurentian’s assets are liquidated, creditors have been told to expect 8.5 to 16.7 per cent.
LUFA vice-president Louis Durand said he believes the plan of arrangement put before creditors is now “as good as it gets” under the CCAA.
While he said he would understand if terminated members voted no on the plan of arrangement, Durand said the union still has more than 200 active members who would like the university to move forward and exit the CCAA.
“What I would like to say is we did what we could do in the CCAA process,” he said. “We did the best we could.”
Laurentian University, LUFA and LUSU issued a joint news release on the issue Aug. 16.
“This represents a very positive development in Laurentian’s path to exit from the CCAA proceeding,” said the news release.
“With both LUFA and LUSU supporting the plan and encouraging their members to vote in favour, Laurentian’s ability to successfully emerge from the CCAA proceeding has gained important momentum.
“Implementation of the plan will secure the future of the university, continuing employment for approximately 600 full time employees and several hundred part time employees, the continuation of the pension plan, and no disruption for students.”
Laurentian board chair Jeff Bangs said in the press release that the university is “truly grateful” for the efforts of LUFA and LUSU through the CCAA proceeding.
“The focus is now firmly on the university’s future for the benefit of students, employees, all stakeholders and the broader community that Laurentian serves,” he said.
LUSU president Tom Fenske said in the news release that “we believe that a vote in favour of the plan is in the best interest of our members. The plan represents a viable path forward for Laurentian University and all its stakeholders.”
However, a group of faculty members terminated by the university also issued a news release Aug. 16, encouraging creditors to vote against the plan of arrangement.
They say creditors should do this to send a clear message to the parties who developed the plan of arrangement: come up with a better one.
The province has already provided two bailouts to the tune of $116.5 million, the group of fired faculty said.
“Yet (Laurentian Pres. Robert) Haché and the board of governors expect us to believe that we have a stark choice: either the plan or closure,” said the statement. “Why do some believe that this is the last provincial bailout? If the past is any measure, we’ll see others. But only if we vote against the current plan.”
The terminated faculty group said in past CCAA cases, a vote against the plan simply sends all the parties back to the negotiating table to come up with a better plan. In some cases, CCAA insolvency plans have gone through as many as four revisions, the group said.
Responding to these statements, LUFA’s Durand said “the question is, do we call the bluff?” He said he believes Laurentian’s financial situation really is serious, and as well, the university can’t keep expecting the province to come through with more money.
“At some point, there will be a stop,” he said. “And I feel that the stop is now.”