Laurentian University’s creditors voted Wednesday in favour of its plan of arrangement, although sources tell Sudbury.com the debt plan passed by a slim margin.
This vote paves the way to finally exit creditor protection under the Companies’ Creditors Arrangement Act (CCAA).
A plan of arrangement is essentially a plan put forward by an insolvent organization to pay out its creditors, and it must be approved by these creditors.
The university expects to go back to court to finally exit CCAA creditor protection on Oct. 5.
Specific numbers related to the plan of arrangement vote have not yet been released by Laurentian.
However, sources who attended the creditors’ vote provided Sudbury.com with the numbers.
It had to be approved by a majority of the affected creditors, with the votes also representing at least two thirds of the total dollar value of proven claims.
The plan of arrangement was approved by 87.4 per cent of the number of eligible voters who cast ballots, which means the first test was met.
Sources tell Sudbury.com the second test was also met, but by a much narrower margin. Creditors representing 68.9 per cent of the total value of the claims voted in favour, meaning the vote was only 2.2 per cent over the two-thirds threshold.
Laurentian University said in a press release that the plan of arrangement represents the culmination of more than 18 months of collaboration by Laurentian and its creditors, union leaders and key stakeholders.
The vote is a significant milestone for the university as it seeks to emerge from CCAA as a successful and sustainable institution for the long term.
“We are pleased by the confidence shown by Laurentian’s creditors and all our stakeholders as a result of this vote,” said Jeff Bangs, chair of Laurentian University’s board of governors, in the press release.
“It’s exciting to see the community unite toward the common goal of ensuring that Laurentian University will operate for years to come as a critical part of the fabric and economy of Northern Ontario. This vote puts us one step closer to that reality.”
As stated above, now that the plan has been approved by creditors, a court order will be sought by Laurentian on Oct. 5, which allows the plan to be implemented following satisfaction of certain conditions.
Once the plan is implemented, Laurentian said it will have successfully emerged from its CCAA restructuring as a financially sustainable university with a solid path for future success. Implementation of the plan is expected to occur later this fall.
“We are grateful for the ongoing support of the Government of Ontario, and for the active participation of all of our partners throughout this difficult process,” said Bangs.
“While there is still work to be done, this milestone sends a strong message to current and future students, to our dedicated staff and faculty, to anyone within the Laurentian community, and to people throughout the North. We’re confident we will soon emerge from the restructuring stronger than before and with a sense of renewed optimism.”
The Laurentian University Faculty Association (LUFA), which had recommended members vote in favour of the plan of arrangement, also put out a press release minutes after the vote results were announced.
LUFA said in its press release that following years of cuts and devastation, the approved plan of arrangement will protect jobs, secure faculty and staff pensions, and allow the Laurentian community to begin rebuilding what was lost as a result of poor university management and provincial government inaction.
“Today is the beginning of a new chapter for Laurentian University,” said LUFA president Fabrice Colin, in the press release.
“As the long and painful CCAA process draws to a close, we can finally begin the work of restoring our university’s integrity as well as the programs and jobs cut because of bad management and an irresponsible provincial government.”
Given the severe restrictions of the CCAA, it was difficult to negotiate changes to the Plan of Arrangement that would benefit faculty, staff, and the broader university community, the press release said.
However, following months of challenging negotiations, LUFA managed to secure important changes to the final Plan, including: the departure of senior administrators responsible for this crisis; increased compensation for creditors, including faculty and staff; a commitment to hire additional faculty; and formal LUFA representation on new committees struck to review university operations and governance, the union said.
“These gains only begin to restore what we have lost over the past two years, but we won’t stop here,” said Colin. “We are committed to working tooth and nail to rebuild faculty complement, revive cut programs, and ensure that meaningful changes are made to improve the transparency and accountability of the university’s governance so that this can never happen again.”