Sudbury·Audio

Don't blame CCAA process for Laurentian University's financial troubles, insolvency expert says

Sudbury Liberal MP Paul Lefebvre will table a private member's bill today targeting the process that's allowed Laurentian University to operate while restructuring, which has led to public outcry over deep staff and program cuts. However, one insolvency expert warns to "be careful what you wish for."

Sudbury MP expected to table bill today that targets the school's use of the insolvency process

The community group Save Our Sudbury has had a couple of rallies to protest cuts at Laurentian University in Sudbury, Ont. An insolvency expert says those cuts were necessary to get the university back on sound financial footing. (Erik White/CBC )

Sudbury Liberal MP Paul Lefebvre is expected to table a private member's bill today in the wake of the financial crisis at Laurentian University.

And while it won't help the northern Ontario school's situation, Lefebvre says the bill is meant to exempt other post-secondary institutions from going through restructuring under the Companies' Creditors Arrangement Act (CCAA) process.

During an emergency debate in the House of Commons last week, Lefebvre took the province to task for failing to live up to its funding obligations. 
    
"We knew the situation that Laurentian University was in and it is not the only one," he said. "We cannot continue cutting post-secondary funding at the provincial level and just expect the federal government to always come in with a cheque."

Sudbury MP Paul Lefebvre plans to table a private member's bill on Monday in an effort to prevent public institutions like universities from falling under the Companies' Creditors Arrangement Act. (CBC News)

Dozens of faculty and staff have been laid off, and entire schools and programs discontinued under court-ordered restructuring — usually reserved for businesses.

Lefebvre describes recent cuts to faculty and staff at Laurentian as "carnage".

Timmins-James Bay MP Charlie Angus argues the legislation is not in the interests of the public.

"We have to change the CCAA laws so we never again can have a precedent where a public institution can be ripped apart and destroyed," he said.

"There are national implications about what is happening [at Laurentian] right now. It's something we have deal with at the federal level to make sure that it will never happen again."

NDP MP Charlie Angus says the laws around the CCAA process need to be changed so public institutions can not longer 'be ripped apart and destroyed.' (Adrian Wyld/Canadian Press)

However, an insolvency expert with Fontaine and Associates in Sudbury wonders what alternatives politicians have in mind.

Nathan Sugeng said creditor protection was necessary to prevent Laurentian from going bankrupt.  

"Are you going to put something else in its place, or are you going leave them without any tools and completely dependent on government?

"If the government were to step in and bail them out, you gotta be careful what you wish for," he said, adding the government could attach funding conditions that could be worse than going through a court-monitored process.

While the CCAA process has been blamed for the staff and program cuts at Laurentian, Sugeng doesn't believe fault lies with the measures being taken.

Nathan Sugeng, a licensed insolvency trustee in Sudbury, wonders what politicians have in mind as an alternative to the CCAA process. (Supplied/expertfile.com)

"There's a lack of resources, and I'm not saying the province should get a free pass here. We need an educated workforce and an educated society," said Sugeng.

"But to blame the process for the government not stepping in, I don't believe is the answer. This process is designed to help [Laurentian]."

Sugeng compares the situation to surgery.

"Would you give the doctor grief for cutting out a quarter of your lung to get rid of the cancer? It was needed in order to save the body. Sometimes these tough decisions have to made for the greater good."

Many have said the Companies Creditors Arrangement Act was never meant to be used in the case of a public sector institution like Laurentian University. We heard from an insolvency expert about the CCAA and whether there are other options available. 0:00

With files from Kate Rutherford

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