Laurentian University expects to ask for creditor protection to be extended to Nov. 30 at an upcoming hearing, according to court documents filed Friday.
The “stay of proceedings” protecting the insolvent university from its creditors currently expires Sept. 30.
Laurentian University has been undergoing court-supervised restructuring under the Companies’ Creditors Arrangement Act (or CCAA) since declaring insolvency in February 2021.
However, Laurentian’s emergence from the CCAA is now in sight after its creditors approved the plan of arrangement earlier this month, which lays out a plan for LU to pay back at least a small portion of what it owes.
The court document filed Friday said Laurentian is initially seeking a short stay of proceedings extension until Oct. 7. The motion for this short stay extension is to be held “in writing,” meaning the judge will make a decision based on the documents filed.
The short extension of the stay of proceedings has been requested to give Laurentian enough time to attend a “sanction hearing,” which has been scheduled for Oct. 5.
At the Oct. 5 hearing, Laurentian would request an order from the court approving the plan of arrangement and authorizing LU to proceed with plan implementation. It’s at that hearing that Laurentian expects to request the further stay extension until Nov. 30.
“Sanctioning of the Plan at the Sanction Hearing represents another significant step towards LU’s emergence from the CCAA proceeding, and will allow LU to proceed to implementation of the Plan,” said an affidavit from outgoing Laurentian president Robert Haché included with the latest court documents.
“At the Sanction Hearing, LU will seek to further extend the Stay Period to Nov. 30, 2022, to permit LU time to implement the Plan.”
The court documents filed Friday also seek an amendment to the terms of the $35 million debtor-in-possession (or DIP) loan Laurentian took out to bridge its finances during its insolvency.
The DIP loan was originally held by a private lender, but the province took it over earlier this year.
Laurentian is requesting that the courts change the previous Sept. 30 DIP loan maturity date to Nov. 30.
“LU seeks Court approval of the DIP Amendment so that the outside Maturity Date corresponds with the outside date of the final extension to the Stay Period that LU expects to seek in the CCAA proceeding, and to provide sufficient time for LU to complete the necessary steps to allow implementation of the Plan and an exit from the CCAA Proceeding,” said Haché’s affidavit.
As a condition of plan implementation and LU’s emergence from the CCAA proceeding, exit financing will need to be obtained in order to repay in full the DIP loan.
“Prior to the expiry of the Maturity Date, LU expects to have entered into an agreement with the DIP Lender to provide exit financing in order to re-finance and fully repay the DIP Facility upon implementation of the Plan,” Haché said.
Haché says Laurentian expects to emerge from CCAA in November
In written materials submitted to Laurentian’s senate, which held its latest meeting on Sept. 20, Haché also referred to what must happen before exiting the CCAA, which he said the university expects will happen in November.
Haché, along with LU vice-president, academic Marie-Josée Berger, will be retiring from Laurentian prior to the university’s emergence from the CCAA as part of the terms of the plan of arrangement.
He and Berger were not in attendance at the Sept. 20 senate meeting, where they were censured by senate members, but the outgoing president provided a written report that included some information about the exit from insolvency restructuring.
The beginning of the section of Haché’s report addressing the CCAA repeated a message he has stuck by since Laurentian entered insolvency restructuring in February 2021.
“Entering formal restructuring was the only option available to the university save closing its doors,” said Haché. (The report said this would have happened at the “end of January 2020,” but this is presumably a typo, given the university entered insolvency in February 2021).
A preliminary report this spring by Ontario Auditor General Bonnie Lysyk said Laurentian “strategically planned” for its insolvency. Following the report’s release, Haché denied this finding. Lysyk’s full report into Laurentian is expected out this fall.
As stated above, Haché said the next step will come during the Oct. 5 court date.
Laurentian’s board chair, Jeff Bangs, told Sudbury.com earlier this month that during the Oct. 5 court date, the judge will be asked to ratify the results of the plan of arrangement vote, and that "gives us the green light to proceed to plan implementation, or also known as the date of emergence.”
He said there will be a period of 21 days after the judge’s ruling in which parties will have a chance to appeal. “I'm not a lawyer, but I've been briefed on this, and I understand it’s not an easy bar to reach,” Bangs said.
Haché said in his report “there are various conditions to implementation of the Plan that must be met, and Laurentian and its advisors are working diligently to ensure that those can be completed as quickly as possible.
“That includes finalizing a loan agreement for exit financing to repay in full the Debtor-in-Possession (DIP) Loan that was made available to Laurentian as part of the CCAA process.
“We expect that Laurentian will emerge from the CCAA process in November as a restructured university with a solid financial platform for future success.
“We appreciate all of the efforts undertaken by many stakeholders to give Laurentian this opportunity to reset, and create a more sustainable university the entire community can be proud of.”
Haché also shared some thoughts on what Laurentian will look like once it emerges from the CCAA process.
“The emergence of Laurentian from the CCAA process in November will provide the opportunity for the university to establish its path to a successful and sustainable future,” he said, in the report.
“Much of the transition will have been achieved but much also remains to be done. Governance review and organizational transformation are critical next steps to position the university for success. With emergence I encourage everyone to look forward, not backward - to look to the possibilities of the future in which Laurentian grows its reputation as a leading university for the North strongly aligned with its bilingual and tricultural values.
“I wish everyone, faculty, staff and students, the very best for the work that is still to be done and opportunities that you still have before you and for Laurentian to achieve its potential.”
Heidi Ulrichsen is Sudbury.com's associate content editor. She also covers education and the arts scene