Laurentian University prepares to deal with claims from former staff, unions and its many creditors
SUDBURY -- Laurentian University is working through its insolvency process, preparing a way to deal with claims against it, including ones before it declared bankruptcy and after.
In its fourth report, the accounting firm Ernst & Young outlined a process for handling financial claims from such parties as the banks, smaller creditors, its unions and former staff. The firm, which is the monitor for the process under the Companies' Creditor Arrangement Act, is seeking court approval of its proposals.
With a few exceptions, there would be a deadline of July 30 to make a claim. After that, they would be "be forever barred from making or enforcing any claim against the applicants."
The process would deal with three types of claims: ones that existed before Feb. 1, when LU declared insolvency; ones that arose as a result of the insolvency, such as from staff who lost their jobs or the federated universities who saw their agreement with LU terminated; and what are known as 'D&O' claims – claims against the directors or officers of the university for such things as financial mismanagement or negligence.
The monitor's report gave a list of known creditors, including anyone owed money as of Feb. 1; the faculty and staff unions; the former federated universities; anyone with a contract or lease with Laurentian; and, anyone who began a legal claim against LU before Feb. 1.
Once all the claims are filed, the monitor will try to resolve the claim consensually, accept the claim in full, accept part of the claim or disallow the claim entirely.
Any creditor that disagrees with a ruling by the monitor can dispute the decision and have it heard by a claims officer. And if they don't like that ruling, they can appeal to the courts, whose decision is final.
"Any such appeal shall be binding for all purposes and there shall be no further right of appeal, review or recourse from this court’s determination of a claim," the monitor's report said.
To deal with claims from former staff and faculty, the monitor is proposing developing a process in consultation with the two unions (LUFA and LUSA) and have the court approved that process by July 30.
"At that time, the applicant and the monitor will also propose a process to notify individual employees of their individual compensation claims pursuant to the compensation claims methodology and to validate personal data utilized in calculating individual compensation claims," the report said.
"The resolution of all outstanding grievances are to be addressed as part of the mediation. A process is currently underway to resolve the outstanding grievances and ascertain any monetary claims against the applicant related to these grievances."
The TD Bank, one of LU's major creditors, wants a separate claims process for anyone owed more than $5 million. But the monitor opposes the idea, saying it will create confusion and make the process longer and more complicated.
The report also addresses the appointment of a chief redevelopment officer, Louis Pagnutti, a native of Sudbury who used to work for Ernst & Young.
Pagnutti would be tasked with the challenging job of "undertaking a comprehensive review of its governance and policies and beginning the process of re-building LU’s relationships with its stakeholders, including unions, faculty, staff, students, donors, research-granting agencies, lenders and the communities served by LU."
"He is an alumni of LU with an Honours Bachelor of Commerce degree from LU," the report said. "Mr. Pagnutti has been a significant personal donor to LU for many years in both a financial and non-financial capacity."
If approved, Pagnutti would be paid $650 an hour for his services, up to a maximum of 80 hours a month.
Read the full report here.