A judge has again granted permission to extend the stay of proceedings protecting Laurentian University from its creditors, this time until Sept. 30.
Laurentian has been undergoing insolvency restructuring for well over a year now after declaring insolvency and filing for creditor protection under the Companies’ Creditors Arrangement Act (or CCAA) in early 2021.
Speaking at the May 30 hearing where Laurentian made the request, the university’s insolvency lawyer, DJ Miller, said the latest stay extension “represents the home stretch in Laurentian’s CCAA restructuring.”
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 May 31, which was the previous expiry date of the stay of proceedings before Monday’s hearing.
However, the university said it needs more time to work on a plan of arrangement, given the province’s offer earlier this month to purchase certain Laurentian assets for $53.5 million. Those funds would be made available to creditors as part of the CCAA plan of arrangement.
Chief Justice Geoffrey Morawetz, who presided over the Laurentian matter Monday, as he has most hearings related to LU’s insolvency, asked if the $53.5 million has been allocated to any specific parcels of real estate.
Miller said negotiations are ongoing with the province, “but these specific properties have not been identified, and that is a discussion that will take place in future.”
However, court documents filed by Laurentian indicate that the university has requested that the two buildings occupied by NOSM University — the Health Sciences Education Resource Centre and the Medical School Building — be considered by the province “on a priority basis as part of the discussions and as conversations advance with respect to the province’s purchase of identified real estate assets from LU."
The NOSM University medical school, which was formerly known as the Northern Ontario School of Medicine, became a degree-granting institution independent of Laurentian University earlier this spring as part of the fallout of Laurentian’s insolvency.
In terms of the next steps, Miller said “the next few weeks are going to involve a pretty intense effort in terms of negotiating the language of the CCAA plan with key stakeholders.”
She said Laurentian expects to be able to serve motion materials within the next 30 days, or by the end of June, “seeking a meeting order for the purpose of being able to present a CCAA plan to its creditors.
“And so assuming that timing, it would put them in a meeting of creditors to vote on a plan to be held around the middle or end of August, assuming that there's no unexpected delays to that timeline, and in order to give creditors a sufficient amount of time to consider the terms of the plan that they're being asked to vote on.
“And then provided the plan is approved at the meeting of creditors, a motion for a sanction order will then be brought reasonably soon after that meeting of creditors.
“And then of course, implementation of the plan would occur as soon as the conditions to implementation have been satisfied.
“Some of the conditions to implementation obviously, would be things like having the exit financing in place, which is replacing the debt financing, and those types of things. So that is the roadmap and timeline that we're working diligently towards.”
Documents filed before the courts also indicate 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.
“Suffice it to say that there are ongoing, very regular dialogue and discussions with the MCU (Ontario Ministry of Training, Colleges and Universities),” said Miller, with respect to the exit financing mentioned above, the purchase of Laurentian assets, and more.
Ashley Taylor, counsel for Ernst & Young, the firm acting as the court-appointed monitor of Laurentian’s insolvency restructuring, said the monitor supports the request for the extension of the stay of proceedings, as it’s necessary for the university to complete its restructuring.
“We see that the extension should provide comfort to the university stakeholders, including the existing and new students of Laurentian, which is obviously a critical stakeholder,” Taylor said.
“Lastly, in the opinion of the monitor, the applicant is acting in good faith and with due diligence.”
The extension of the stay of proceedings wasn’t the only matter dealt with during Monday’s hearing.
Laurentian University and the University of Sudbury have also come to an agreement regarding the funding and administration of the pension plan for current and former U of S employees following the severing of the agreement with LU’s former federated partners in 2021.
Details of that agreement are available through the court motion materials.
Chief Justice Morawetz also endorsed this agreement during the May 30 court hearing.
An agreement regarding the pension plan was reached with another former federated university, Huntington University, a year ago, while the third former federated university, Thorneloe University, has not come to such an agreement.
Those attending Monday’s court hearing also learned that a June 16 hearing date is currently scheduled to deal with a matter relating to Laurentian’s insolvency involving the Art Gallery of Sudbury.
However, Taylor said that “efforts are underway to make that motion unnecessary.”
Chief Justice Morawetz also made those attending Monday’s court hearing aware that he will be unavailable for three weeks as of June 24, as he will be “not in the jurisdiction.”
“If it's necessary to proceed in my absence, I will designate another commercial list judge to hear the matters, although it would be my preference to hear them myself,” he said. “But unless I can find my way to Canada House in London, it might be challenging.”
— Sudbury.com
