After a year and a half of insolvency proceedings, Laurentian University filed its long-awaited proposed plan of arrangement documents before the courts July 21, with an expected pool of cash of up to $53.5 million for its creditors.
A plan of arrangement is a plan put forward by an insolvent organization to pay out its creditors, and it must be approved by these creditors.
Laurentian continues to undergo court-supervised restructuring after declaring insolvency in February 2021, and filing for creditor protection under the Companies’ Creditors Arrangement Act (or CCAA).
As it revealed details of the plan of arrangement, Laurentian also announced July 21 what it termed the “pending retirement” of the university’s president, Robert Haché, as well as its provost and vice-president, academic, Marie-Josée Berger.
The university said the retirements of these two senior administrators, to be effective prior to the emergence from the CCAA, is “part of the plan of arrangement materials” filed Thursday.
An interim president and provost will be appointed, and the formal search process to identify a permanent president, in consultation with the Laurentian community, will be commenced.
The unions representing Laurentian faculty and staff have been calling for the resignation of LU’s senior leadership since last year, renewing their call as recently as earlier this week.
The pool of cash for Laurentian’s creditors is to come from the sale of university real estate to the province of Ontario, as per an agreement this spring with the province. Exactly what real estate is to be included in this sale has not yet been determined.
Laurentian plans to pay back in full certain classifications of claims against the university, including those made by secured creditors and those owed vacation pay.
The balance of the distribution pool of funds “will be paid out on a pro rata basis” (meaning proportionately allocated) to the remaining creditors, who are referred to as “affected creditors” in the plan of arrangement.
These creditors “are expected to receive a distribution in the range of 14.1 per cent to 24.2 per cent of the amount of their Proven Claim,” said the documents filed before the courts.
“The court-appointed Monitor has prepared an analysis of what creditors would likely receive in a liquidation scenario if the Plan was not approved,” said Haché, in a letter to creditors. “The range of recovery for Affected Creditors in a liquidation scenario (if the Plan is not approved) is anticipated to be between 8.5 per cent - 16.7 per cent.
“Accordingly, the Board of Governors of Laurentian and the independent Court-appointed Monitor recommend that all Affected Creditors vote FOR (in favour of) the Resolution to approve the Plan.”
Ted Mann, an expert in the area of insolvency law and a professor in the University of Ottawa’s faculty of law, told Sudbury.com in a May interview that a plan of arrangement normally involves creditors receiving a very small percentage of what they’re owed.
Laurentian’s creditors made claims against the insolvent university of approximately $360 million (although certain types of claims worth $78 million were subsequently removed from the process).
Laurentian president Robert Haché said in his July 21 affidavit that the plan of arrangement would “address all the pre-filing indebtedness of LU, and create a clean balance sheet going
Laurentian said in a press release issued Thursday evening it will be seeking a court order on July 28, authorizing it to call a meeting of creditors to be held on Sept. 14, in order to vote on the plan.
Provided the plan is approved by creditors at the meeting, a further court order will be sought by Laurentian on Oct. 5, which allows the plan to be implemented following satisfaction of certain conditions.
Documents filed before the courts said that only “affected creditors” with proven claims (or their proxyholders) and unresolved claimants are entitled to vote at the meeting of Laurentian’s creditors.
For the plan to pass, it must be approved by a majority of those affected creditors who are present at the meeting to vote. That majority must represent at least two-thirds of the total dollar value of the proven claims of those creditors present at the Sept. 14 meeting.
Heidi Ulrichsen is the associate content editor at Sudbury.com. She also covers education and the arts scene.