Letter reveals Laurentian University used creditor protection to cut jobs and programs

Laurentian University turned to the courts for creditor protection as a way to axe faculty jobs and departments while avoiding pushback from the union as well as paying out what was owed to professors in severance, newly released documents indicate.

In a letter declining a $12-million financial lifeline offered by the Ministry of Colleges and Universities — help that came with a special adviser providing oversight and a promise not to turn to the courts — Laurentian president Robert Haché outlined why using the Companies’ Creditors Arrangement Act (CCAA), a first for a Canadian public post-secondary institution, was the best path for the school to take.

Haché, in the Jan. 25, 2021 letter, said the grant from the province was not enough to cover all of the financial obligations the Sudbury school faced and could open up the board to liability. Without creditor protection, the letter said in part, it would be difficult to downsize faculty — which he estimated at 120 full-time employees — and reduce academic programs from 171 to 136.

“We see no scenario in which these reductions would be voluntarily agreed to by LUFA (the faculty association),” he wrote, adding “even if it could be achieved outside of a CCAA proceeding, it would require years of attrition from voluntary departures, (which may not ultimately be the same people who would be deemed most appropriate) and substantial severance obligations.”

A few days later, on Feb. 1, CCAA proceedings started and wound up Monday.

The Laurentian University Faculty Association said the newly released letters contain “shocking details about the university’s senior leadership plans to cut 124 faculty and over 50 programs, regardless of whether they received government support or CCAA protection.”

The association said “the unsealed documents confirm that the university administration was intent on ramming through cuts and circumventing LUFA and the democratically elected university senate in the process.

A recent report from Ontario’s Auditor General Bonnie Lysyk found that Laurentian’s senior administration spent years planning to exploit the CCAA to gut programs and faculty positions at the university. The auditor general found that 932 students and their degrees were affected by the restructuring, as well as the loss of 341 faculty and staff positions. The school had run deficits since 2009 and loosened its policies to allow it to take on more debt.

Lysyk said the university had expanded its campus without knowing if it would lead to a boost in enrolment, and was getting by on a line of credit it could not afford.

She called Laurentian’s use of creditor protection “unsuitable and damaging.”

The school said in a statement that now that the creditor protection process is behind it, “this milestone allows Laurentian to continue to work with its key stakeholders to rebuild from a solid financial foundation.”

Liz Tuomi, press secretary to Colleges and Universities Minister Jill Dunlop, said “since Laurentian University started its restructuring process, our government has been committed to making sure that students get the support they need and helping Laurentian chart a course for success so that it can continue to serve students, parents, faculty, staff and the community.”

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