Laurentian expecting about 15 claims of more than $5M from creditors, court documents show
A judge has approved proposals from Laurentian University on how to handle claims from creditors, a major step as the school attempts to emerge from its insolvency process.
In a decision dated May 31, Chief Superior Court Justice G.B. Morawetz made special provisions for banks, which are collectively owed $130 million.
The banks wanted a separate process to deal with claims of more than $5 million, proposing they be handled in a separate court process. The decision said there are about 15 claims that fit into the category.
But Ernst & Young, the monitor overseeing the insolvency, said that would create an unnecessarily complicated and lengthy process. That's an issue because the next deadline the school faces for this phase of the process is Aug. 31.
So Morawetz compromised, ruling that a team of up to four inspectors be appointed, two by the major lenders, and two by all other creditors with claims of $5 million or more.
"The monitor shall inform the inspector group that they are to act in the best interests of all creditors and that they stand in a fiduciary relationship to all creditors and should perform their duties impartially," he wrote.
The monitor would consult with the inspectors when settling or "compromising" claims valued at $5 million or more, and can proceed as long as three of the four inspectors agree.
"In the event that the monitor does not receive authorization to compromise the material claim, the monitor or any member of the inspector group may apply to court within 10 days for review of the proposed acceptance," Morawetz wrote.
Among the claims expected to be addressed are the banks (owed about $130 million); current and former employees; federated universities arising from the termination their agreements with Laurentian; potential claims arising from the pension-related issues; and other creditors with pre-filing and restructuring claims.
The judge also approved the appointment of Louis Pagnutti as the chief redevelopment officer. Pagnutti is tasked with the challenging job of "undertaking a comprehensive review of its governance and policies and beginning the process of re-building LU’s relationships with its stakeholders, including unions, faculty, staff, students, donors, research-granting agencies, lenders and the communities served by LU."
The University of Sudbury was the sole objection to Pagnutti's appointment, suggesting it be delayed until they can look for someone who better reflects the francophone and Indigenous nature of Laurentian.
But Morawetz said claims by the University of Sudbury have largely been dealt with, and they don't have a significant role in the work Pagnutti will be doing.
"In effect, U Sudbury is not part of the going forward plan of Laurentian," he wrote. "Consequently, the participation of U Sudbury in Phase 2 of the restructuring will be severely limited. The support for the appointment of Mr. Pagnutti is widespread and, in my view, this appointment should take effect as soon as possible."
Read the full decision here.