With the courts recently having approved Laurentian University’s request to extend its insolvency restructuring into the new year, the president of the university now says he can’t guarantee it will be done by the current Jan. 31, 2022 deadline.
With Laurentian declaring insolvency Feb. 1 of this year under the Companies’ Creditors’ Arrangement Act (CCAA), that would mean the university could be under bankruptcy protection for more than a year.
Laurentian president Robert Haché addressed the matter at the Sept. 21 meeting of the university’s senate.
The current extension of the stay of proceedings protecting the university from its creditors is until Jan. 31 of next year, but Haché revealed in his president’s report that “the exact date of Laurentian’s exit from the CCAA cannot be stated unequivocally at this time.”
However, he said this will need to occur in the first quarter of 2022.
Haché said Laurentian’s path through the CCAA process is being assisted by a $35-million bridge loan (also called a debtor-in-possession, or DIP loan).
“Cash flow at the university is currently relatively strong, which is expected for this time of year, but the process must be concluded as rapidly as possible,” he said.
As has become routine at Laurentian senate meetings, the university president received some pointed questions about the CCAA from members of the governing body.
Senate member Josée Turcotte, a psychology professor at Laurentian, asked Haché why the CCAA process is taking so long.
She wondered why the university didn’t start divesting itself of assets earlier on, when it said it needed to do this from Day 1 in the process.
“The longer we stay under CCAA, there’s a lot of repercussions related to this,” she said, adding that the faculty “get squeezed and squeezed and squeezed … I have serious concerns about that, President Haché.”
Haché said that his “personal promise is not one day longer in CCAA than necessary.”
He said there has been some misunderstanding in the community that somehow the CCAA process was going to be a “very short process” of three to four months, but that Laurentian tried to communicate from the start that it would last at least until the end of the year.
“That’s actually quite rapid as far as CCAA processes go,” Haché said, adding that the process is taking longer than Laurentian would have liked, but by days or weeks. “In many instances they can last two or three years …
“Are we absolutely going to finish by Jan. 31? I can’t promise that. But what I can promise is that it needs to finish in the first quarter of 2022. That’s a requirement.”
After declaring insolvency Feb. 1, and making massive cuts to its faculty and programs, among other actions, Laurentian University is currently in Phase 3 of the CCAA.
Haché said in his report that the critical milestones for Phase 3 of the CCAA process include concluding a plan of arrangement with Laurentian’s creditors that is acceptable to them in satisfaction of their claims, is acceptable to the court and then to implement the terms of the restructuring plan.
“I know this process has been extremely difficult and has caused much pain and frustration,” he said in his report.
“I reiterate that the university only embarked on this path as there was no other option. We stand by the decision to undertake a formal restructuring proceeding, and the extraordinary milestones achieved to date make clear that it was in the best interest of the university to have done so.”