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Thorneloe U. appeal of Laurentian federation agreement ‘disclaimer’ working its way through courts

A number of ‘factums’ (or written arguments) have been filed with the courts by Thorneloe, LU and Laurentian’s bridge lender
thornloe
Thorneloe University. (File)

An appeal by Thorneloe University of a May 2 court decision allowing Laurentian University to terminate the more than 60-year-old agreement with the three federated universities operating on campus is still working its way through the courts.

Thorneloe filed the notice of motion to appeal the ruling on May 3, just a day after it was issued.

Since then, a number of documents have appeared on the website dedicated to Laurentian’s insolvency matters.

That includes factums (a written argument filed with the court) from Thorneloe and responding factums from both Laurentian University and the debtor-in-possession (DIP) lender that so far has loaned the insolvent university $35 million to bridge its operational funding.

We reached out to Thorneloe University president John Gibaut to ask when the appeal might be heard in court, but Gibaut said he doesn’t know at this time, and will keep us posted.

Thorneloe University, along with the University of Sudbury, fought the “disclaimer” or severing of the federation agreement in court, while Huntington University, which had come to an agreement with Laurentian, did not.

Laurentian said it needs the roughly $7 million per year that is transferred to the federated universities, which offered classes that counted toward Laurentian degrees, to cover its own costs.

All three federated universities have cancelled their spring classes due to the situation (although Thorneloe continues to offer theology classes, as its theology degrees are conferred directly by Thorneloe).

The lawyer representing Thorneloe University in court in late April, Andrew Hatnay, said during court proceedings that Laurentian will gain “relatively nickels” by terminating the federation.

Thorneloe, on other other hand, Hatnay said, will be bankrupted by the situation, which he said will be “catastrophic” for the federated university.

In a factum filed by Laurentian June 4 as it responds to Thorneloe’s appeal, LU said the federated universities have a negative financial impact on Laurentian.

“Each time a Laurentian student took an elective course through one of the federated universities rather than an elective course offered directly through Laurentian, it represented lost tuition revenue to Laurentian,” the factum said.

Laurentian said federated universities are charged an administrative service fee of 15 per cent of grant revenue and tuition received by LU to cover costs for services it provides to federated universities such as campus security and student supports.

But the actual administrative cost associated with these services would be more like 30 per cent.

Thorneloe said in its June 8 responding factum the idea that Laurentian is subsidizing federated universities is a “mischaracterization.”

“There was no subsidizing by Laurentian,” the factum said.

“The federated universities earned their own tuition and grant money from the courses they produce and taught, which were made part of the Laurentian Faculty of Arts curriculum with Laurentian's approval. 

“The tuition and grant money generated by those courses were collected by Laurentian in a clearing house manner and then sent on to Thorneloe. Laurentian does not pay Thorneloe out of its own revenues. 

“The tuition and grants funds paid by students and the government respectively are received by Laurentian in an administrative arrangement flow-through via Laurentian to Thorneloe pursuant to the Financial Distribution Notice. Those funds do not belong to Laurentian. They are not a subsidy.”

As stated above, the Laurentian’s DIP bridge loan lender (Firm Capital Corp.) has also filed a factum, seeking an order to dismiss Thorneloe’s appeal of the severing of the federation agreement.

The most recent DIP loan of $10 million had as one of its terms the severing of ties with Laurentian’s three federated universities, to the strong objections of Thorneloe and the University of Sudbury.

The DIP lender said in its factum it made a “business decision that certain conditions would have to be satisfied,” and these were negotiated with Laurentian.

It said Thorneloe’s appeal should “be dismissed so that the ‘lifeline’ provided by the DIP loan to Laurentian is not prejudiced or negatively impacted.”

In its responding factum, Thorneloe said the CCAA court erred “by not rebuffing the threat of the DIP lender in court to refuse to lend further and not directing the DIP lender to advance the next $10M if in fact the DIP refused to do so.”



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