The union representing Laurentian University faculty is going after insurance money held by the insolvent university, saying the university’s leadership mismanaged its finances.
Laurentian University Faculty Association (LUFA) president Fabrice Colin explained that lawsuits cannot be filed against Laurentian at this time, as the university is still under court protection through the Companies Creditors’ Arrangement Act (CCAA).
However, under the auspices of the CCAA, LUFA was able to file something called a D&O (directors and officers) claim against Laurentian on behalf of its members.
The union did just that at the end of July, filing a D&O claim against past and present directors and officers of the university, including the board of governors and some senior administrators.
Laurentian University is covered by an insurance policy for claims made against its officers — and those are the funds LUFA is hoping to tap into on behalf of its members.
Under CCAA law, claims against directors and officers are made through a D&O claim process.
Colin said that in its D&O claim, LUFA is taking issue with the “misuse and loss” of various funds meant for its members.
These dollars were commingled in a bank account with the university’s general operating funds, and were lost as part of the university’s insolvency.
This includes funds that were supposed to be earmarked for the Retirees’ Health and Benefit Plan (RHBP), which was terminated April 30 as LU restructured, as well as Laurentian University Research Funds (LURF), professional allowances and loss of sabbatical credits for terminated faculty members.
Colin said he doesn’t know when the D&O matter will be dealt with in the courts.
He said the amounts that could be accessed depends on the claim, first of all, being deemed valid, the number of valid claims and the corresponding amount, and Laurentian’s insurance policy limits.
Colin said the D&O claim process is distinct and parallel to other claim processes in the insolvency process.
There are an estimated 1,200 past and present Laurentian University employees — including LUFA members — considered creditors of Laurentian.
In August, the courts approved a compensation claim methodology for the employee group, which includes employees terminated this spring as part of Laurentian’s insolvency restructuring.
The employee group is in the process of receiving compensation claim assessment notices from Laurentian, with assistance from Laurentian’s court-appointed insolvency monitor, the firm Ernst & Young.
Laurentian’s other creditors, including the banks to which it owes millions, are being dealt with in a separate claims process, which was also approved this past summer.
Colin said he expects that, in the end, his members will only receive a fraction of what they’re owed.
“That’s the cruel aspect of the CCAA proceedings,” he said, adding that the legislation is designed to protect companies from bankruptcy.
Sudbury.com asked Laurentian University about the situation, and received the following written response:
“The claims process is being administered by the court-appointed monitor pursuant to a claims process order and a compensation claims process order that were issued by the court, the terms of which were developed by the monitor and Laurentian in discussions with our labour partners and other stakeholders,” the statement said.
“All claims will be addressed as part of that court-supervised claims process.”
Laurentian initially declared insolvency and filed for creditor protection under the CCAA Feb. 1. It has since been restructuring, which has included massive job and program cuts this spring.
At the end of August, the courts approved the university’s request to extend its restructuring and creditor protection until Jan. 31, 2022.
– Sudbury.com
