Laurentian University can cut programs, lay off faculty as part of restructuring, court rules
SUDBURY -- A judge has formally declared Laurentian University insolvent, giving the university breathing room as it works toward restructuring by April 30.
The ruling released Thursday by G.B. Morawetz, chief justice of the Ontario Superior Court of Justice, allows the university to access $25 million in funding to cover salary and other costs as it restructures.
Laurentian will also be able to cut programs and lay off staff, as long as that process doesn't affect courses students are currently taking.
The school can "permanently or temporarily cease, downsize or shut down any of its business or operations," Morawetz ruled, adding that LU "shall not cease, downsize or shut down any parts of its business if such action would cause any current students … to be unable to continue and complete courses that they are already enrolled in."
Laurentian can also "terminate the employment of such of its employees or temporarily lay off such of its employees as they deem appropriate."
D.J. Miller, of the firm Thornton Grout Finnigan, represented Laurentian at a hearing this week where she argued without significant cuts, Laurentian wouldn't be able to emerge from the insolvency process.
"Fundamentally, there are too many courses and programs taught by too many faculty for too few students," Miller said, adding that reducing the number of programs and faculty is key. "Nothing else matters if they can’t do that."
At the end of January, Laurentian declared insolvency under the Companies’ Creditors Arrangement Act (CCAA), revealing more than $300 million in debts and declaring without relief, it would run out of money in February to pay salaries.
Ernst & Young has been appointed the monitor of the process, while Justice Sean Dunphy, of the Ontario Superior Court of Justice, was appointed the mediator Feb. 5. A neutral party, the mediator is a key player in the restructuring, since he has the job of working with all sides to mediate program and staffing cuts in consultation with all sides.
Dunphy will take part in the review and restructuring of all programs, staffing, help the sides agree to a new collective agreement and resolve more than 100 outstanding grievances the Laurentian University Faculty Association has against the school.
He'll also take part in a review of the school's federated university model and help complete the final long-term restructuring plan by April 30.
In his ruling, Morawetz is also allowing LU to ignore all freedom of information requests until the restructuring is completed.
Linda Chen, a representative of the Information and Privacy Commission, opposed that request during Wednesday's hearing, arguing it had never been done before. Chen said LU normally only receives about 25 FOI requests a year.
"We would like to see a more moderate approach to achieve the same goal," Chen said, suggesting only FOIs related to the insolvency process be suspended.
But Miller argued every FOI request takes significant resources, and LU needs to be fully dedicated to restructuring considering the tight timelines.
"They are labour intensive," she said. "There's a certain process that must be followed for each request."
Morawetz agreed, and also also granted Laurentian the right to stop making special top-up payments for its underfunded pension plan that amounted to more than $40,000 a month until the restructuring is completed.
He also agreed to keep two letters between the LU president Robert Haché and the province sealed. The letters were exchanged in late 2020, and LUFA wanted them unsealed and to cross-examine Haché on their contents.
Morawetz said he will release the detailed reasons for his decisions in the coming days.