Laurentian is considering seeking an extension of creditor protection beyond the end of this month
Several key upcoming court dates regarding LU’s insolvency were revealed at the May 11 hearing, in which millions of consultancy fees were also approved
Several key upcoming court dates related to Laurentian University’s insolvency were revealed in a May 11 hearing primarily focused on approving millions of dollars in consulting fees related to LU’s restructuring.
Speaking on behalf of Ernst & Young, the firm acting as court-appointed monitor of Laurentian’s insolvency restructuring, Ashley Taylor said the matter related to the Art Gallery of Sudbury should be heard on May 16.
Due to the history of the relationship between the Art Gallery of Sudbury and Laurentian, the assets associated with the gallery were caught up in the restructuring process under the Companies’ Creditors Arrangement Act (or CCAA).
Taylor also said a “motion to extend the stay” would be heard on May 30. The stay of proceedings protecting Laurentian University from its creditors currently expires on May 31.
Laurentian said in April it plans to file documents this month for a plan of arrangement to repay its creditors so it can finally emerge from its insolvency restructuring.
Sudbury.com contacted Laurentian to learn more about their plans to apply for an extension of stay request. We received the following written response:
“The current stay period in the CCAA proceeding expires on May 31,” the statement said.
“A further extension will be requested, as previously indicated, to allow the process to move forward with the next steps, including the presentation of a plan of arrangements to creditors and a creditor vote, a prerequisite for the emergence to be successful. Motion documents that provide details on the status of Laurentian’s restructuring will be available on or about May 23, 2022.”
Judge Geoffrey Morawetz, who has presided over most of LU’s insolvency-related cases, also told those present at Wednesday’s hearing that he expects to issue a ruling early next week on a complaint against Laurentian regarding an alleged historic sexual assault that was also taken up in the CCAA Process.
The motion heard on May 11 sought approval of millions of consulting fees incurred in 2021 as part of Laurentian’s insolvency restructuring.
The court was also asked to approve activities undertaken by Ernst & Young last year while acting as court-appointed monitor for the university.
The fees claimed by the monitor (Ernst & Young) during the period from February 1 to December 31, 2021 are $4.9 million, with disbursements of more than $54,000 (plus taxes of $646,431) .
(Disbursements are disbursements incurred in addition to professional fees).
Ernst & Young accounting professionals who provided accounting assistance to Laurentian University for its year-end financial statements are claiming fees of nearly $948,000, with disbursements of $119 (plus tax of $123,242) for 2021.
Ernst & Young’s legal counsel, Stikeman Elliott LLP, is seeking fees in excess of $2.7 million, with disbursements of $12,425 (plus tax of $360,743) for the same period.
Taylor said the court’s role in a motion relating to the accounts of a court-appointed monitor is to assess them “on the basis of the overriding principle of reasonableness.”
The overriding consideration in assessing reasonableness “is the overall value provided by the monitor and his counsel.”
Taylor said the case law shows that “it would be inappropriate to reduce paralegal fees on the basis of the suggestion that they are too high.”
He said the proceedings represent the first time in Canada that a public educational institution has filed for creditor protection under the CCAA.
“This restructuring has been scrutinized by Laurentian’s creditors, stakeholders, regulators, government, special interest groups and the public from the outset,” said Mr. Taylor.
He said that at the time of the CCAA filing, Laurentian’s internal resources were already stretched and that since the filing, Laurentian has lost several key employees, leaving a large number of key administrative positions vacant.
“Together, this has negatively impacted the ability of Laurentian’s remaining staff to manage both their regular day-to-day duties and advance many of the additional time-consuming aspects of the CCAA proceedings,” Taylor said.
“This caused the monitor to take on many more day-to-day duties from the candidate than would normally be the case, including finance, accounting, labor relations issues, communications and other matters.
“It also led Laurentian’s Board of Directors to ask Ernst and Young to provide accounting staff to assist Laurentian’s finance team with the preparation of their annual financial statements, among other things.
Taylor said Ernst & Young was also involved in Laurentian’s stakeholder mediation, which resulted in massive program and staff cuts last year, which he says helped achieve annual savings of approximately $40 million.
He said Ernst & Young was also involved in breaking the agreement with federated universities operating on the LU campus in 2021.
“These savings are significant and have created a cost structure that should be financially sustainable for Laurentian,” Taylor said.
He said the monitor was also central to the claim process against Laurentian by its creditors.
“More than 200 proofs of claim have been filed with an asserted total of a claim value in excess of $300 million,” Taylor said. “The process of reviewing, accepting, reviewing and rejecting the claims is ongoing, but significant progress has been made.”
No other parties beyond Taylor made submissions on the May 11 court date.
“I don’t see anyone who wishes to speak, so I am prepared to grant the order today which will be dated today,” Chief Justice Morawetz said.
“I will provide a few brief reasons, more or less in line with the law that you set out in your brief, Mr. Taylor. These should be available within a few days.
Heidi Ulrichsen is Associate Content Writer at Sudbury.com. It also covers education and the arts scene.