Documents filed before the courts May 24 revealed that the province has agreed to purchase assets from Laurentian University in the amount of $53.5 million as the university attempts to come up with the funds to pay out its creditors.
This as Laurentian continues to undergo insolvency restructuring after filing for creditor protection under the Companies’ Creditors Arrangement Act (or CCAA) well over a year ago.
Laurentian president Robert Haché said in a May 23 affidavit that the terms of this agreement would “allow LU to make 100 per cent of such net sale proceeds available to its creditors under a CCAA Plan, as real estate transactions are completed.”
He also said that LU anticipates the terms of the agreement would allow the university “to continue to use and occupy the real estate, land, or buildings. That would not be the case if real estate assets were sold to third parties generally.”
Laurentian’s creditors made claims against the insolvent university of approximately $360 million.
Court documents say that 95 per cent of claims against LU (or 1,090) have now been dealt with, and $78 million in asserted claims have now been removed from the claims process.
Among those claims removed from the process is a category called “directors and officers” (or D&O) claims against Laurentian’s insurance, which court documents say will now not be determined within the CCAA because they’d add time to the claims process.
Documents filed before the courts also indicate that the province has agreed to the refinancing of the existing $35-million debtor-in-possession loan (DIP loan) it has extended toward Laurentian with a longer term loan on implementation of a CCAA plan.
Laurentian intends to return to court May 30 to ask that the stay of proceedings protecting the university from its creditors be extended once again to Sept. 30 of this year. The current stay of proceedings expires May 31.
The university has been engaged in negotiations with its creditors as it prepares to come to a plan of arrangement.
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.
Laurentian’s intention had been to seek a “meeting order” for its creditors to vote on a formal plan of arrangement by the expiry of the stay period on May 31.
“Although significant progress has been made towards that goal, LU will require further time before a Meeting Order containing LU’s CCAA Plan can be brought before the court,” said Laurentian’s motion record.
The court document also said that even if a meeting order was sought by May 31, a stay extension to Sept. 30 would have still been required in order to implement the final steps in moving towards emergence from the CCAA proceeding.
Referring to the province’s offer to purchase Laurentian assets for $53.5 million, the court document said “this positive development has implications for the proposed CCAA Plan and LU requires further time to revise the proposed CCAA Plan and negotiate with its key creditors to reflect this development.”
Haché said in his affidavit that Laurentian “currently anticipates that it will be in a position to serve motion materials (including a CCAA Plan) seeking a Meeting Order by the end of June, after revising the proposed CCAA Plan and negotiating with its key creditors regarding this development.”