To pass Wednesday’s vote, the plan needed a majority of creditors to vote yes, and they had to represent two-thirds of the value of claims owed by Laurentian. The Laurentian University Faculty Association confirmed that 522 creditors voted in favor of the plan, representing 87.4 percent of eligible votes. Creditors who voted in favor of the plan represented 68.9 percent of the value of the total claims owed by Laurentian. To pass, the plan needed at least 66.6% support. This is breaking news. An earlier version of the story is below.
The future of Laurentian University hangs on a vote later today. Creditors of the Sudbury, Ont., university will vote on a plan of arrangement, one of the final steps in insolvency proceedings that began in February 2021. If the vote passes, creditors would get cents on the dollar and the university would move forward with a plan to climb out of its financial hole. If it fails, Laurentian says it will close its doors and liquidate its assets, including buildings on its campus. The university also said that in the event of a liquidation, it would end its pension plan for staff and faculty members, and that would “result in reduced pension benefits for many current and future retirees as a result of the lack of funding.”
What is a settlement plan?
The settlement plan means Laurentian is approaching the final chapter of insolvency proceedings under the Companies Creditors Act (CCAA). It sets out the terms between Laurentian and its creditors and outlines the steps it will need to take to rebuild as it emerges from insolvency proceedings. Fabrice Colin, president of the Laurentian University Faculty Association, said creditors can expect to receive between 14 percent and 24 percent of the money they are owed under the terms of the plan. ONE court document filed in February 2021 when Laurentian filed for bankruptcy — which under the CCAA allowed it to operate while it dealt with its financial issues — listed more than 500 creditors. They ranged from major banks such as RBC, which owed more than $71 million, to local construction companies, government agencies and laid-off staff and faculty members. To pass, today’s (Wednesday) vote will require support from 51 percent of creditors, representing two-thirds of the money owed. Colin said he was “cautiously optimistic” that creditors would vote in favor of the plan. The teachers union has recommended that its members vote yes. “If the plan is rejected, there is absolutely no guarantee that, for example, we will have a stronger bargaining position or that the province will support the second round of negotiations,” he said. “Again, on top of that, there is a risk that the university will be closed.” If creditors vote to approve the plan, Laurentian will present it to the court for approval on October 5. Once approved by the courts, the plan can be implemented. Despite a tumultuous year, Laurentian continued to offer its remaining programs. In August, the university said it had a 25 percent year-over-year increase in confirmed students heading into the fall semester. Tom Fenske, president of the Laurentian University Staff Association, said he hopes the vote passes. (Erik White/CBC)
Updated design
Late last week, Laurentian management filed an amended plan that would shorten the payment period to plaintiffs from four to three years. That’s because the province and Laurentian have come to an agreement to buy the university’s assets in a shorter period of time. In May, the province said it would buy $53.5 million worth of Laurentian real estate. Although he has not said what properties he would buy, that money would go to the university’s creditors. The staff union recommended that members eligible to vote today vote in favor of the settlement plan. “I think I’d be lying to you if I said I wasn’t nervous,” Fenske said. “The risk of a negative vote is very high and we just don’t see any evidence that more money would flow in.” However, some laid-off faculty members believe they could have a better plan if they vote no on the current offer. Eduardo Galiano-Riveros was a physics professor from Laurentia, but he lost his job in April 2021 when the university cut 69 programs and laid off nearly 200 staff and faculty members. In April 2021, Laurentian University closed 69 programs and laid off nearly 200 staff and faculty members. (Erik White/CBC) He now works at McMaster University in Hamilton and represents some of the 111 former Laurentian faculty members who lost their jobs last April. “We still support a no so that the administration and the province can go back to the lottery and come up with a fairer, more equitable settlement plan that then we as creditors might be able to support,” Galliano – Riveros said. Galliano-Riveros said he and some of his former colleagues do not believe Laurentian will close if the settlement plan is not approved. “Statistically and historically speaking, typically there have been some amendments to get plans accepted and get a positive vote,” he said. But Laurentian insisted there will be no second chance. Galliano-Riveros said that may not matter in the end, for him and other faculty members who lost their jobs. “At this time we are not looking out for the interests of the university. We are no longer affiliated with the university,” he said. “They kicked us out of a 15-minute Zoom meeting. What we’re looking out for is our interests and all the creditors.”
