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Post-secondary schools will be banned from declaring insolvency

Citing the story of Sudbury’s Laurentian University, federal gov’t made the announcement in this week’s fall economic statement
The federal government has signalled it will move to prevent post-secondary institutions from declaring insolvency, as Laurentian University did in 2021-22.

The federal government has signalled it will move to prevent post-secondary institutions from declaring insolvency.

This in the wake of Laurentian University’s 2021-2022 insolvency, which included mass layoffs and program cancellations, the severing of ties with federated universities operating on campus (resulting in even more layoffs and program cancellations) and a plan of arrangement that will see LU creditors receive only roughly 14 to 24 per cent of what they’re owed.

The issue is tackled in the federal government’s fall economic statement, which was released on Nov. 21.

“Following the unprecedented financial crisis and restructuring at Laurentian University in 2021, Canadians have raised concerns about the appropriate protection of important programs and services in the event of a publicly funded post-secondary educational institution becoming insolvent,” said the fall economic statement.

“Since then, Innovation, Science, and Economic Development Canada has engaged with universities, students, faculty, and other stakeholders to explore how to best protect the public interest functions of these essential institutions in insolvency and restructuring situations. 

“The 2023 Fall Economic Statement proposes that the government will amend federal insolvency laws, namely the Companies’ Creditors Arrangement Act and the Bankruptcy and Insolvency Act, to exclude public post-secondary educational institutions from becoming the subject of proceedings under either Act. 

“These amendments will reduce the risk of negative consequences in possible corporate restructuring at public post-secondary educational institutions, such as reduced programming.”

The federal government is making the move after efforts by several area politicians.

Sen. Lucie Moncion, a graduate of LU, authored a bill which is currently before the Senate. The bill aims to prevent post-secondary institutions from accessing the CCAA as a means of dealing with financial hardship.

Sudbury Liberal MP Viviane Lapointe said she would sponsor the bill if it’s passed by the Senate.

Earlier this year, Sudbury MP Viviane Lapointe spoke with Inovation, Science and Energy Minister François-Philippe Champagne about the impact Laurentian's decision to enter the CCAA process had on Sudbury, noting more than 100 professors and 70 staff members lost their jobs while 24 programs were cut.

“We discussed how the province of Ontario failed to intervene. They were aware of the financial mismanagement and did not act. The CCAA process did not have to be used,” Lapointe told “In my discussions with university officials, faculty, unions, and community members, all have stated there is a need to ensure this never happens again. Today, we made it clear that we agree, and are taking the necessary steps to preserve the security of students’ education and the employment of university faculty and staff.”

Late last year, following Laurentian’s exit from insolvency after 22 months, Timmins-James Bay NDP MP Charlie Angus also introduced a private member’s bill on the same topic.

However, his bill goes further, and would prevent all publicly funded institutions from seeking creditor protection under the CCAA.

The Ontario Confederation of University Faculty Associations (OCUFA) is welcoming the news.

“OCUFA and its member organizations and allies have worked for years to secure this change to bankruptcy legislation through public campaigns and lobbying efforts,” said Nigmendra Narain, OCUFA President, in a press release.

“Through the tireless efforts of OCUFA, our member organizations, and our allies, we are proud to see real change happen today to ensure that our public universities will no longer be vulnerable to the dangers of corporate restructuring,” said Narain. 

“What happened at Laurentian should never have happened, and now we can ensure that it will not happen again to another public university in Canada.”

“Canadians across the country know how valuable our world-class public university system is, and we know that these reforms will help protect our public universities and help them thrive.”

In 2022, Ontario Auditor General Bonnie Lysyk stated the CCAA/BIA process was an inappropriate method for dealing with the financial challenges of public institutions. 

Documents also released at that time showed that the Ford government knew of Laurentian’s financial situation and offered little meaningful assistance to Laurentian and its community during a time of crisis, said OCUFA’s press release.

“OCUFA has worked for years to bring about this change and today’s announcement marks a critical step in the right direction for the financial health of our country’s public institutions,” said Jenny Ahn, executive director of OCUFA. 

“The Liberal government promised to reform these laws in 2021, and we are glad to see they have kept that promise to protect our world-class public universities. We are incredibly proud of the work OCUFA, in collaboration with its 31 member organizations, has accomplished in making the necessary changes to these laws.”


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