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
'I just can't believe that it took so long': Body found in wreckage 3 months after deadly fire
A man accused of arson in a January Old Strathcona apartment fire is expected to be charged with manslaughter after a body was discovered in the burned building late last month.
No proof man lied to brother about number of kittens born in litter, B.C. tribunal rules
A man was denied a $5,000 payout from his brother after a B.C. tribunal dismissed his claim disputing how many kittens were born in a litter.
Snakes almost on a plane: U.S. TSA discovers a bag with small snakes in passenger's pants
According to an X post by the Transportation Security Administration, officers at the Miami International Airport found the small bag of snakes hidden in a passenger's trousers on April 26 at a checkpoint.
Russia puts Ukrainian President Zelenskyy on its wanted list
Russia has put Ukrainian President Volodymyr Zelenskyy on its wanted list, Russian state media reported Saturday, citing the interior ministry’s database.
The pros and cons of discussing mental health issues in the workplace
A group of lawyers has written what they call a groundbreaking book about how mental health is perceived in the legal profession.
Explosion at train station leads to discovery of stolen car on Montreal's South Shore: police
Police are investigating after a BMW exploded in the St-Lambert Exo train station parking lot on Montreal's South Shore.
A Chinese driver is praised for helping reduce casualties in a highway collapse that killed 48
A Chinese truck driver was praised in local media Saturday for parking his vehicle across a highway and preventing more cars from tumbling down a slope after a section of the road in the country's mountainous south collapsed and killed at least 48 people.
A candidate for Germany's key party was beaten up while campaigning for European elections
A candidate for Chancellor Olaf Scholz's center-left party in next month's election for the European Parliament was beaten up and seriously injured while campaigning in an eastern city, the party said Saturday.
Two killed after collision with truck on Hwy. 417 near Limoges, Ont.
Ontario Provincial Police say two people were killed after a car and a transport truck collided in the westbound lanes of Highway 417 near Limoges, Ont. on Tuesday afternoon.