Laurentian University has won the agreement of its creditors on a?debt repayment plan that will cost it less than a?quarter of its obligations, clearing the way for a?revival of the bilingual Ontario public institution.
The by 87?per cent of Laurentian’s several hundred creditors, holding nearly 70?per cent of its debt. In a?major remaining hurdle in a court-supervised insolvency process dating to?February 2021, the university met the requirement for approvals covering most of the creditors and two-thirds of the debt.
Laurentian said the step has lifted a huge burden off a university that is the nation’s first publicly funded institution to seek creditor protection – a tactic later condemned by Ontario’s official auditor as unnecessary and deeply harmful to students and faculty.
“Gratitude is in order” for all involved in the settlement, the chair of Laurentian’s board of governors, Jeff Bangs, . “We have given ourselves the chance to redefine LU and together write a new and brighter chapter featuring transparency, collegiality and accountability.”
And yet, admitted Mr Bangs – a political operative from the Progressive Conservative Party of Ontario appointed to the Laurentian board in December as part an overhaul following the university’s pursuit of creditor protection – the cost was heavy.
“So much was lost by so many in the lead-up to this pivotal moment,” he wrote. “We must never forget that.”
Those losses include cutting the university’s 9,000 students by about half; dropping 69?programmes, or?more than a?third; and slicing a?staff of 400?full-time and 300?part-time professors by nearly?half.
The Ontario government also has plans to sell up to C$53?million (?35?million) of Laurentian real estate to help pay off the 500-plus creditors. And Laurentian has accumulated at least C$24?million in legal and accounting costs associated with the insolvency process.
Laurentian’s woes stemmed from a decade of university leaders expanding the campus while misjudging the potential student demand, the Ontario auditor general, Bonnie Lysyk, concluded in a report this past April.
Laurentian’s president, Robert Haché, is among top university leaders now leaving, in part because Ms?Lysyk concluded that his administration hid the severity of the problem from the public and the governors, and used the bankruptcy process rather than negotiate with its staff and accept aid from the provincial government.
The university’s apparent success in whittling its debt to a fraction of the amount it owed should not now be taken as vindication of its use of the insolvency process, Ms?Lysyk said in an interview.
The outcome still involves heavy job losses, legal costs and an unprecedented disruption of trust in public institutions to honour their debts, she told Times Higher Education.
“It does put in question the public sector’s desire to continue to pay debts when they incur them,” she said. “Nobody would think that a public-sector entity would rescind on what they owe people.”
Debts that were owed to hundreds of?academic staff – mostly those who were fired – totalled more than C$43?million, according to a?tally by the Laurentian University Faculty Association.
range from local companies to big corporations including the Royal Bank of Canada, which was owed more than C$71?million. The settlement will provide them between 14?per cent and 24?per cent of the amounts they are owed, the faculty association said.
Laurentian faculty also accepted a 5?per cent salary cut in April, and the temporary application of five furlough days annually, said a faculty association spokesman, Ben Lewis.
“Salaries will be up for negotiation again in the next round of bargaining in 2025, at which point union members will determine how they want to approach the issue,” Mr Lewis said.
The average professor salary at Laurentian is C$134,000, according to Payscale?Inc.
The university, meanwhile, said that after a sharp drop in applications, its student enrolment this academic year jumped by 25?per?cent.
The creditor agreement faces court approval early next month.
