Judge rejects Thorneloe’s effort to revive $9.8M claim against Laurentian
An Ontario court has rejected Thorneloe University’s efforts to revive its financial claim against Laurentian University.
Thorneloe, along with the University of Sudbury and Huntington University, operated for decades under a federated university agreement with LU.
But when Laurentian declared insolvency in February 2021, it renounced the agreement, claiming it was losing too much money under the terms of the deal.
It reached a settlement with Huntington, but the University of Sudbury and Thorneloe went through the claims process, seeking compensation.
The monitor of LU’s insolvency rejected Thorneloe’s claim of $9.8 million in losses, ruling it was owed nothing.
Lawyers for Thorneloe then appealed to Chief Justice G.B. Morawetz, the chief justice of Ontario’s Superior Court of Justice. Morawetz is the judge that oversaw LU’s insolvency process under the Companies’ Creditors Arrangement Act.
The appeal was heard earlier this month. Thorneloe’s lawyers argued that the court should be guided by a report prepared by “expert valuator,” Glenn Bowman of Farber Corporate Finance Inc.
That report estimated Thorneloe’s operating enterprise value to be worth $2.8 million and $3.3 million, along with other assets (mostly cash and cash equivalents) of $6.7 million.
“Thorneloe submits that when an entity has been destroyed by the actions of another such as by a breach of contract, the required approach to assess damages is the loss of commercial value approach,” the court transcript said.
“Thorneloe submits that the case law supports the proposition that even if the business is unprofitable it can still have value.”
In response, the monitor argued that the university lost money in each of the four years before LU declared insolvency. Losses ranged from more than $90,000 in 2018 to $1.15 million in 2021.
It also criticized the Farber report for not actually assessing the damages caused by LU’s ending of the federated university agreement.
“Instead, the Farber report presented a visibly flawed approach not based on the economic reality of Thorneloe,” the document said.
“This flawed approach sought to present a value for the business, the majority of which was the assets they retained, and the operational value based on the revenue earned versus the actual operating cash flow, which in all recent periods was negative.”
Further, the monitor argued that Thorneloe still had possession of its $6.7 million in investments, which were unaffected by the insolvency process.
“Additionally, the disclaimer does not prevent Thorneloe from continuing operation of its residences and, in fact, Thorneloe has continued to operate its residences,” the transcript said.
“Finally, the monitor submits that there has not been any evidence provided to support a decrease in the profitability of Thorneloe’s residences operation being caused by the disclaimer.”
In the end, the judge ruled that the Farber report falsely gave the impression that Thorneloe was profitable when it was not.
“The Farber report does not consider Thorneloe’s net cash flows – i.e. revenues net of expenses,” the judge ruled.
“Because Thorneloe’s net cash flow is reasonably expected to continue to be negative, it is not entitled to claim the loss of academic and commercial value.”
Read the full transcript here.
CTVNews.ca Top Stories
More than 115 cases of eye damage reported in Ontario after solar eclipse
More than 115 people who viewed the solar eclipse in Ontario earlier this month experienced eye damage after the event, according to eye doctors in the province.
B.C. seeks ban on public drug use, dialing back decriminalization
The B.C. NDP has asked the federal government to recriminalize public drug use, marking a major shift in the province's approach to addressing the deadly overdose crisis.
Last letters of pioneering climber who died on Everest reveal dark side of mountaineering
George Mallory is renowned for being one of the first British mountaineers to attempt to scale the dizzying heights of Mount Everest during the 1920s. Nearly a century later, newly digitized letters shed light on Mallory’s hopes and fears about ascending Everest.
Orca calf that was trapped in B.C. lagoon for weeks swims free
An orca whale calf that has been stranded in a B.C. lagoon for weeks after her pregnant mother died swam out on her own early Friday morning.
Sophie Gregoire Trudeau on navigating post-political life, co-parenting and freedom
Sophie Gregoire Trudeau says there is 'still so much love' between her and Prime Minister Justin Trudeau, as they navigate their post-separation relationship co-parenting their three children.
'I was scared': Ontario man's car repossessed after missing two repair loan payments
An Ontario man who took out a loan to pay for auto repairs said his car was repossessed after he missed two payments.
Powerful tornado tears across Nebraska, weather service warns of 'catastrophic' damage
Devastating tornadoes tore across parts of eastern Nebraska and northeast Texas Friday as a multi-day severe thunderstorm event ramped up in the central United States, injuring at least three people.
Toxic testing standoff: Family leaves house over air quality
A Sherwood Park family says their new house is uninhabitable. The McNaughton's say they were forced to leave the house after living there for only a week because contaminants inside made it difficult to breathe.
Trump's lawyers try to discredit testimony of prosecution's first witness in hush money trial
Donald Trump's defence team attacked the credibility Friday of the prosecution's first witness in his hush money case, seeking to discredit testimony detailing a scheme between Trump and a tabloid to bury negative stories to protect the Republican's 2016 presidential campaign.