Laurentian University said it finally expects to exit creditor protection next month after an order issued by the courts on Wednesday.
The Sudbury university has been undergoing court-supervised restructuring under the Companies’ Creditors Arrangement Act (or CCAA) since Feb. 1, 2021.
In September, the university’s creditors narrowly approved the plan of arrangement that lays out how Laurentian plans to pay them back, with most expected to receive only a small portion of what they’re owed over the next three years.
The Oct. 5 court order from Chief Justice Geoffrey Morawetz, the judge who has dealt with most matters related to Laurentian’s insolvency, involved granting the university a “sanction order” approving the plan of arrangement.
Morawetz also issued a couple of other court orders during the same hearing.
He extended the stay of proceedings protecting Laurentian from its creditors until Nov. 30 as it implements the plan of arrangement.
Laurentian counsel D.J. Miller said this is expected to be the final stay of proceedings extension, “because the plan will be implemented.”
A third order from Morawetz involves the unsealing of letters between Laurentian University and the Ontario Ministry of Training Colleges and Universities that were kept secret as part of the CCAA.
These letters would be unsealed as of the implementation of the plan of arrangement.
Court documents from Laurentian said that it is the university’s expectation that the plan of arrangement will be implemented by Nov. 30, “barring any unforeseen events.”
They also say Laurentian is currently negotiating with the Ontario Ministry of Training, Colleges and Universities regarding the terms of exit financing documentation, which is one of the conditions of the plan of arrangement.
That exit financing would repay in full the $35 million debtor-in-possession loan currently held by the province that Laurentian took out to bridge its finances after declaring insolvency.
Subject to receipt of the requisite government approvals, Laurentian will seek another court order on Nov. 1, authorizing LU to enter into the exit financing agreement.
“With this most recent approval, Laurentian is now weeks away from being able to successfully emerge from the CCAA process,” said a press release issued by the university Oct. 5.
“This significant milestone should give confidence to those applying to Laurentian that they will be able to start and finish their degrees here.”
Laurentian’s counsel said during the hearing LU is the first university in Canada to have sought insolvency protection, and there has been a lot of public interest in the case.
“I would just on behalf of Laurentian like to acknowledge the many stakeholders who have been affected by the restructuring and who have provided Laurentian with an opportunity to hit the reset button for a financially sustainable future,” said D.J. Miller.
Miller also acknowledged Laurentian’s labour partners and its employees, who have remained focused on the needs of students throughout the CCAA and also in the midst of a global pandemic, which she said has been “particularly challenging.”
Following the emergence from the CCAA, Laurentian “will have hit the reset button and will be operating more independently,” she said.
Between the Oct. 5 court hearing and the implementation of the plan of arrangement, Laurentian will be working with its legal counsel and the firm Ernst & Young to transition to the “post-CCAA world,” Miller said.
Ernst & Young is the firm that has been acting as the court-appointed monitor of Laurentian’s CCAA proceedings.
Miller indicated during the hearing that Ernst & Young will continue advising Laurentian after the implementation of the plan of arrangement.
However, she said Lou Pagnutti, who was brought on by Laurentian during its insolvency in the court-appointed role of chief redevelopment officer, will be discharged from his role as of the exit from the CCAA.
Restructuring costs at Laurentian were up to $26.1 million as of mid-September, with another $5.2 million expected to be paid out by Dec. 2.
“This has been a difficult and challenging process for all involved,” said Chief Justice Morawetz, after he granted the requested court orders.
“It has taken I think about 21 months from start to finish, and there's been a number of highly contested matters throughout. But a compromise has been arrived at and it has been approved by the creditors and the affected parties, and under very difficult circumstances.
“I do hope that this provides a resolution to the past and provides a roadmap for the future for Laurentian University, for its students, for its professors, all of its employees and for the city of Sudbury.
“It has been a challenging time, but hopefully, there will be better days ahead.”
Heidi Ulrichsen is Sudbury.com’s associate content editor. She also covers education and the arts scene.