Ernst & Young, the court-appointed monitor of Laurentian University’s insolvency restructuring, will go before a judge on May 11 to ask that millions in consultants’ fees incurred during 2021 be approved.
The firm also asks that the court approve the activities it undertook last year while acting as the court-appointed monitor for the university.
Laurentian University declared insolvency on Feb. 1, 2021, filing for creditor protection under the Companies’ Creditors Arrangement Act (or CCAA).
As part of its insolvency restructuring, Laurentian made massive program and staff cuts in the spring of 2021.
With the stay of proceedings protecting LU against its creditors currently set to expire May 31, Laurentian plans to file a plan of arrangement this month in which it sets out a roadmap to pay out its creditors.
Fees claimed by the monitor (Ernst & Young) during the period of Feb. 1 to Dec. 31, 2021 are $4.9 million, with disbursements of more than $54,000 (plus taxes of $646,431).
(Disbursements are out-of-pocket expenses incurred in addition to professional fees).
Court documents show that the total number of hours worked by Ernst & Young monitor professionals during 2021 was 8,045 hours, with an average hourly billing rate of $611.
Accounting professionals with Ernst & Young (referred to as EY FAAS in the court documents) who provided accounting assistance to Laurentian University in connection with its year-end financial statements are claiming fees in the amount of nearly $948,000, with disbursements of $119 (plus taxes of $123,242) for 2021.
The total number of hours worked by the EY FAAS professionals during 2021 was 1,915, with an average hourly billing rate of $495.
Ernst & Young’s legal counsel, Stikeman Elliott LLP, is claiming fees of more than $2.7 million, with disbursements of $12,425 (plus taxes of $360,743) for the same time period.
The total number of hours worked by Stikeman’s professionals on the LU file during 2021 was 3,067 hours, at an average hourly billing rate of $900.
For those interested, Ernst & Young provides its detailed invoices to Laurentian, including a breakdown of what each professional earned during the invoice period.
During the period of Feb. 1 to Feb. 12, 2021, right after Laurentian filed for creditor protection under the CCAA, Ernst & Young invoiced $278,070 (plus $36,149 in taxes).
Sharon Hamilton, senior vice-president with Ernst & Young, herself billed Laurentian for $108,150 during that 12-day period, saying she worked 123.6 hours on the LU file, at a rate of $875 an hour.
The court motion brought forward by Ernst & Young says the rates charged by all three groups are comparable to the rates charged by other professional firms in the Toronto market for the provision of similar services.
The 12th report of the monitor, filed by Ernst & Young April 28, takes a comprehensive look at these fees, as well as the work undertaken by the firm and its counsel on behalf of Laurentian during 2021.
“The fees and disbursements of the monitor and its counsel resulting from these activities and the other work described herein are significant,” said the report.
“However, at all times the work performed by the monitor, including by the monitor’s counsel at the direction of the monitor, has been in accordance with the provisions of the court orders and undertaken in good faith with a view to advancing the interests of the applicant and its stakeholders, including to maximize the amounts available for distribution to creditors and seeking to ensure that those amounts are ultimately distributed amongst creditors fairly and equitably in accordance with their respective legal entitlements.
“Having regard to the unique circumstances of these CCAA proceedings, the monitor believes that its fees and disbursements and those of its counsel are fair and reasonable.”
The report said that these CCAA proceedings are unique, as they involve the first public university to file for CCAA protection, significantly complex issues and a multitude of competing interests from varied groups of stakeholders.
“The state of LU’s records and its past practices and lack of internal resources have required more hands-on participation of the monitor, including significant support to LU in preparing its financial statements and cash flow forecasts and managing day to day operations,” said the report.
“This has contributed to the monitor and its counsel (in addition to the applicant’s counsel) undertaking a significantly greater scope of work than in a typical CCAA case.”
