In early February, Laurentian University, a university located in Sudbury, Ontario, filed for creditor protection under the Companies’ Creditors Arrangement Act, RSC 1985, c C-36.
The filing of Laurentian, a publicly-funded university, follows the recent CCAA proceeding of Quest University, a private university located in Squamish, BC, discussed in a previous post.
Laurentian’s court materials describe many years of operational deficits in the millions of dollars per year despite Laurentian’s attempts to reduce costs, such as efforts to reduce its workforce, approve pay freezes, and negotiate salary reductions with employees. An extensive campus modernization project, declining enrolments of students, and recent changes to the Ontario tuition fee structure are cited as significant factors in Laurentian’s predicament. The COVID-19 pandemic has apparently exacerbated Laurentian’s problems, with decreased revenues due to the presence of fewer students on campus and increased expenses associated with protective measures to reduce the transmission of the virus among those required to be physically present on campus.
Laurentian’s status as a public university adds a significant degree of complexity to the CCAA proceeding. During the course of the proceeding, Laurentian intends to continue to operate and to minimize the disruption to students as much as possible. Ontario’s Ministry of Colleges and Universities has appointed a special investigator to review the causes of Laurentian’s insolvency and to help the Ontario government to determine next steps.
Ultimately, Laurentian is planning to implement a “Laurentian 2.0” framework through the CCAA proceeding. This is set to involve several steps, including a restructuring of Laurentian’s academic model and reduction in the number of undergraduate programs, a reduction in the number of faculty members, and a compromise of Laurentian’s obligations. However Laurentian is ultimately restructured, it is doubtless that the process will be complex and will involve a number of difficult decisions.