Province bailing out Laurentian University with long-term loan

The Ontario government is providing Laurentian University with a long-term loan as the school works to emerge from insolvency. (File)

The Ontario government is providing Laurentian University with a long-term loan as the school works to emerge from insolvency.

Previously, Laurentian had to get what is known as a DIP loan from private institutions at a higher rate of interest.

The province is also spending more than $53 million to buy LU assets, but will allow the university to access them while using all the money from the sale to pay creditors.

And in the latest update on its restructuring process, the university said the process should be largely complete by the end of June. LU is heading to court May 30 seeking an extension of its deadline to complete restructuring to Sept. 30.

"As discussed above, significant progress on the claims process has been made," the court documents said.

"This includes resolution of over 95 per cent of the claims and the removal of $78 million of asserted claims from the claims process."

Laurentian declared insolvency under the Companies Creditors' Arrangement Act (CCAA) in February 2021, making massive cuts to programs and faculty. The school has faced a firestorm of criticism since then that culminated in Auditor General Bonnie Lysyk declaring last month that LU chose to go the CCAA route when other options were available.

It has become an election issue, and has resulted in the University of Sudbury lobbying to take all French-language programs from LU. The Northern Ontario School of Medicine has already been taken away from Laurentian and made independent.

In addition to buying $53 million in assets, the province is providing $35 million in operating money, COVID-19 funding of up to $6 million, and up to $22 million in funds to compensate for a drop in enrolment.

The money is being provided through the Ministry of Colleges and Universities (MCU).

"LU’s commitment to a process for the development of a new strategic plan was a term of the financial support package that MCU communicated to LU in December 2021, and will be a priority as LU looks to emerge from the CCAA proceeding," the court documents said.

Read the full document here.