YOUR SUNDAY LEARN MORE: Post-secondary now barred from declaring insolvency in Laurentian's wake

The president of the Laurentian University Faculty Association (LUFA) said it’s a “relief” that public post-secondary institutions in Canada no longer have the option of entering court-supervised insolvency restructuring.

“On one hand, it's a huge victory for us, for the sector, and a relief after everything we went through,” said Fabrice Colin.

“But on the other hand, it's sad it took the Laurentian crisis and the suffering of so many faculty members, employees and students for the government to realize how inappropriate these corporate procedures are for public institutions.”

Changes to federal legislation were inspired by the case of Laurentian University, which, as is well known by now, declared insolvency under the Companies’ Creditors Arrangement Act (CCAA) in February 2021. 

Massive cuts to its employees and programs followed, and Laurentian did not exit insolvency until Nov. 28, 2022. 

Most university creditors, including former employees terminated as a result of the insolvency, have yet to be paid out. Money to pay Laurentian’s creditors is to come from the sale of university lands to the province, which must be completed by Nov. 28, 2025.

The relevant changes to federal legislation were under Bill C-59, the Fall Economic Statement Implementation Act, which was tabled in Parliament Nov. 21, 2023, and received royal assent yesterday, on June 20.

The legislation makes changes to the Bankruptcy and Insolvency Act by removing public post-secondary institutions from being able to access the CCAA.

Sudbury.com reached out to Sudbury Liberal MP Viviane Lapointe for her comments on the matter, but she was unavailable to speak to us as of this article’s publication. However, her office did supply a written statement.

“We needed to ensure that when a situation like the Laurentian University financial mismanagement arises, and in this case, where the province of Ontario failed to intervene, that other communities do not become subject to this failure to act,” said Lapointe, in the statement.

“In my ongoing discussions with university officials, faculty, unions, and community members, they all stated there is a need to ensure this never happens again. I brought this message to Ottawa and worked with the government to get this done. I want to thank all those who engaged with me and our government, to ensure a successful outcome.”

Timmins-James Bay NDP MP Charlie Angus, who has been vocal on this issue, called the adoption of this legislation “a huge win.”

“What happened at Laurentian was outrageous and should never have happened in the first place,” he said. “It happened because of a loophole in the Creditor Protection Act. We had to close that loophole to protect other post-secondary institutions. I'm really glad I pushed the Liberal government hard on this.”

Angus actually has a private member’s bill that’s still before Parliament that would prevent all publicly funded institutions from seeking creditor protection under the CCAA.

“Certainly, the main focus was post-secondary,” he said. “So we are going to look at whether or not we can tweak in future legislation making further additions to the CCAA through negotiations or whether we need to bring forward this bill. 

“But the main part of the bill was to protect post-secondary, so we got that. There's certainly mop-up work to do, and we're going figure out what's the best way to do that.”

The Laurentian faculty union’s Fabrice Colin said he too would like to see the CCAA amendments go further, applying to other public institutions such as hospitals, but the current changes “are the first step in the right direction.”

The Ontario Confederation of University Faculty Associations (OCUFA) has also commented on the changes to federal insolvency legislation to exclude public post-secondary institutions.

“Public universities are not businesses and should not be treated as such, and this bill is a crucial piece of legislation that will protect university students, faculty and staff from corporate-style restructuring policies that prioritize creditors over the public interest,” said Jenny Ahn, executive director of OCUFA, in a press release.

“We saw to it that the catastrophe caused by Laurentian’s bankruptcy will never happen again. Years of OCUFA campaigning have paid off, and together with our allies, our advocacy has resulted in a more secure future for our vital public universities,” said Nigmendra Narain, president of OCUFA.

“We thank the federal government for listening to OCUFA, its 30 member organizations, and its allies, to protect the educational institutions that set up our youth for success and drive economic growth and social development in our communities,” he said.

Heidi Ulrichsen is Sudbury.com’s assistant editor. She also covers education and the arts scene.