Banks seek about $100M as insolvent Laurentian University prepares claims process
Deadline to submit claims against Sudbury school is July 30
Former staff, union members, financial agencies and others who claim insolvent Laurentian University owes them money are getting a better idea of the path toward recouping their losses.
The university and its court-appointed monitor, Ernst and Young, are establishing how the claims process is going forward.
For the most part, claims and their supporting proof have to be submitted by July 30.
During an Ontario Superior Court hearing Friday, Laurentian's lawyer, D.J Miller, told the court she expects there will be in excess of 15 claims of over $5 million, with hundreds of claims submitted overall. Details around which ones will be accepted — and for how much — is yet to be determined.
Banks that lent money to Laurentian are among those seeking large claims. For instance, said Miller, Toronto-Dominion Bank is claiming around $30 million and RBC is seeking around $91 million.
Other large claims are expected from Laurentian's Faculty Association (LUFA) and the Laurentian University Staff Union (LUSU).
Justice Geoffrey Morawetz noted the court-appointed monitor overseeing the proceedings said individual employee claims won't be part of the process. The monitor is expected to work with the unions to come up with a methodology to address their losses, and that methodology will then be approved by the court.
LUFA's lawyer said its claim on behalf of the more than 100 professors whose jobs were terminated will be in the tens of millions of dollars.
Efficient and speedy claims process sought
Also on the list are the federated universities, whose agreements Laurentian terminated in April in a move to save money.
Miller admits she doesn't know the entirety of the claims at this point, but there is a sense of urgency about proceeding.
She said Laurentian needs to be finished with the Companies' Creditors Arrangement Act (CCAA) process by the end of the year.
"That's the timeline all of the parties have been working toward, with all the efforts that have been made. And that is only going to be possible if the claims process that is put in place is one that is efficient that can be completed in a timely basis, that is not going to be bogged down or held back by additional elements being added."
Ernst and Young will handle the claims process, and Miller said that's a fair and expedient way to go.
However, she objected to a proposal by TD Bank, which is seeking a provision that the monitor must consult with the lenders on claims over $5 million and, if in dispute, apply to the court for a second opinion.
That, she argued, would hamper the monitor's ability to settle claims and delay and complicate the proceedings.
A lawyer for TD Bank, Stuart Brotman, argued while it's important to move quickly, the process must not be rushed and short timelines shouldn't interfere with a fair claims procedure.
Morawetz seemed disinclined toward that argument, saying he didn't want to turn the claims process into an ongoing debate. He suggested the provision would give lenders increased leverage.
TD seeks provision to handle disputed claims
Brotman countered by saying it would provide increased transparency and consultation.
RBC supported TD's request.
The judge is expected to deliver a written decision on the matter on Monday.
The court also heard about a request to appoint a chief redevelopment officer for the current and upcoming phase of restructuring.
The proposed CRO is Lou Pagnutti, who spent most of his career with Ernst and Young, retiring in 2020.
Miller described Pagnutti as having a unique skill set, in addition to being a passionate Sudburian, graduate of Laurentian and a donor.
"It's appropriate to have Mr. Pagnutti come in, he will be able to navigate a lot of the rebuilding and communications that are going to be required to rebuild trust, to rebuild relationships with key stakeholders, and confidence in the university," she said.
"And also, most importantly, to be able to assist in taking a very strategic review of the systems and processes and policies and governance models and operations of how the university's board and senate will operate in the future. So we view it as a very positive — the university is thrilled."
Pagnutti was chosen in consultation with stakeholders, including the faculty association.