Facing massive long-term debts and lower revenue as a result of COVID-19, Laurentian University has filed for court protection from creditors.
It's the first time in recent memory that a university has done the equivalent of filing for bankruptcy because their debts far exceed their assets and revenue.
In a news release Monday, Laurentian University President Robert Haché said despite being insolvent, the court filing would not affect day-to-day operations and students won’t be affected.
"All decisions that are made will continue to be made in the ordinary course, and will be done in the best interests of those who rely on us to provide a top-quality education," Haché said.
The filing, under the Companies' Creditors Arrangement Act, comes after several financial pressures in the last 10 years, he said.
"These strains include a combination of factors such as historical recurring deficits, declining demographics in northern Ontario, the closure of our Barrie campus in 2019 and the domestic tuition reduction and freeze that was implemented in 2019 and, most recently, various costs and revenue impacts due to the global pandemic," Haché said.
"As we have communicated previously, we are facing unprecedented financial challenges and our financial health is currently amongst the weakest in the province compared to other universities. We intend to change that."
As part of the creditor protection proceeding, and at the request of Laurentian, Ernst & Young Inc. has been appointed as the court-appointed monitor. The monitor’s role includes helping the school formulate and implement a restructuring plan under the supervision of the court.
It should take about three months to complete that process, Haché said.
"I know that this may be a stressful time of uncertainty for all," he said. "For those who may need help to address this difficult news, I encourage you to seek support through our available mental-health services."
Sources speaking on background to CTV News say the university approached the province before Christmas seeking help on what was believed to be $100 million in debt. But since then, a closer look at the books revealed that amount is closer to $200 million, prompting the decision to seek creditor protection.
In a news release, the Ontario government announced it has appointed a special adviser to help Laurentian through its financial crisis.
"It is deeply concerning that Laurentian University has found itself in a situation where such drastic and immediate action is needed to ensure its long-term sustainability," Ross Romano, minister of colleges and universities, said in a statement.
"The government has appointed Dr. Alan Harrison as a special advisor to advise me on options to support Laurentian's path to return to financial sustainability, and ultimately drive Laurentian's long-term competitiveness and success. Laurentian University students remain the government's priority and we are focused on ensuring they can continue their studies without interruption."
Romano said the current situation is "unprecedented," and the government is looking at a range of options to get the situation under control.
That "could include introducing legislation to ensure the province has greater oversight of university finances and to better protect the interest of students and Ontario taxpayers," Roman said in the release.
"The government wants to ensure this issue does not repeat itself in other institutions in the post-secondary educational sector."