Unions representing Laurentian University employees say they’re considering launching legal action against the university’s leadership once LU finally exits insolvency, something that’s expected to happen this fall.
Tom Fenske, president of the Laurentian University Staff Union (LUSU), said the legal action would be filed regarding what he said was the misuse of Retirees’ Health and Benefit Plan (RHBP), which was worth millions, with the hope of recovering damages.
Because Laurentian did not establish a separate trust account for RHBP contributions, money paid into the fund by LU was “recorded as a liability” when the university declared insolvency.
The RHBP was terminated April 30, 2021 as part of Laurentian’s restructuring.
“I guess the basic idea is that Laurentian directors and officers were supposed to hold that money in trust, and instead, they spent it on other things,” Fenske said.
“Because of this, LUSU members now, especially our retirees, are deprived of retiree health benefits.”
Laurentian University has been undergoing insolvency restructuring under the Companies’ Creditors Arrangement Act (or CCAA) since February 2021.
The university’s creditors will vote on the “plan of arrangement,” in which the university lays out how it plans to pay them back, on Sept. 14. Provided the plan of arrangement is approved, the university expects to seek a court motion to exit insolvency on Oct. 5.
Last year, a claim was made on behalf of Laurentian employees under LU’s insolvency process against an insurance policy held by the university, saying the university’s leadership mismanaged its finances.
This was something called a D&O (directors and officers) claim - Laurentian University is covered by an insurance policy for claims made against its officers.
However, D&O claims have since been lifted from the CCAA process.
Fenkse said the plan of arrangement allows Laurentian’s unions to take legal action against directors and officers.
He said the goal would be to recover damages on behalf of union members and retirees. Equally important would be to hold Laurentian’s leadership accountable. “Because, you know, to date, not one of them has been held accountable,” Fenske said.
Fenske said he will be speaking to his membership to see if they’re interested in pursuing the legal action at an Aug. 16 meeting.
Laurentian University Faculty Association (LUFA) vice-president Louis Durand said his union would also like to see the university’s leadership held accountable with regards to the RHBP.
“It's like if you take an insurance policy, and when it's time to claim, there is no money,” he said.
Durand said “someone has to be held accountable” on behalf of Laurentian, and points out that the financial issues that led to the university’s insolvency started before the current slate of leaders began their terms.
He said he heard about issues with the underfunding of the RHBP as early as 2014.
Sudbury.com reached out to Laurentian University for a statement on this matter, and we received the following brief emailed response: "We are fully focused on readying for students’ return in September and the important vote on September 14 on the Plan of Arrangement."
