Newly released documents reveal internal rationale behind Sudbury's Laurentian University declaring insolvency in Feb. 2021.Fred Lum/the Globe and Mail
Newly released documents show that former Laurentian University president Robert Haché believed he needed an insolvency overseen by the courts to get around collective agreements, cut faculty and staff jobs quickly and limit the board of governors’ liability.
Previously sealed correspondence between Dr. Haché and Ontario’s then-minister of colleges and universities, Ross Romano, was made public this week after it was announced that Laurentian had emerged from creditor protection.
The university, located in Sudbury, filed for insolvency in February, 2021. Ten weeks later more than 340 people lost their jobs, including 116 tenured Laurentian faculty, in a restructuring that eliminated dozens of programs and disrupted the course plans of more than 900 students.
In a letter to Mr. Romano in January, 2021, just days before insolvency was declared, Dr. Haché made the case for obtaining court protection under the Companies’ Creditors Arrangement Act (CCAA).
The province had offered up to $12-million to help with short-term cashflow, with the condition that Laurentian not seek CCAA protection and allow a provincial adviser time to assess its finances.
Dr. Haché wrote that without a CCAA filing, members of the board could be personally liable for millions in unpaid wages, vacation pay and debt service costs.
“In the absence of a CCAA proceeding, the directors must have certainty that funds are available for these amounts prior to incurring the liabilities,” Dr. Haché wrote.
The province had already declined to provide such protection, according to Dr. Haché’s letter.
One of the justifications Dr. Haché offered for a CCAA filing was the state of labour relations with the faculty.
The Laurentian University Faculty Association (LUFA) had been without a contract for more than six months at that point. There were 97 outstanding labour grievances and the faculty association had announced it would go to the labour board to accuse the university of bargaining in bad faith and of refusing to trigger the financial exigency clause in the collective agreement. It would also demand documents that, if released, would reveal Laurentian’s financial peril, the president wrote.
He said he feared a strike or a decision by the labour board would irreparably damage attempts to restructure the university.
“Laurentian University simply does not have the ability to withstand a strike, and this would also create the most disruptive outcome for our students,” Dr. Haché said. “A CCAA proceeding provides stability over operations with no disruption to current classes for the balance of the existing term, and the opportunity for a full restructuring to be implemented with the necessary modifications in place for the Fall 2021 term.”
In a recent report, Ontario’s Auditor-General, Bonnie Lysyk, found that the university had planned for months to pursue a CCAA filing and that the associated legal and other fees were approximately $30-million. Ms. Lysyk said Laurentian’s choice to reject the provincial offer and bypass collective agreements “made a bad situation worse.”
Dr. Haché’s letter confirms that he foresaw cutting one-third of university faculty, very close to the number that were eventually terminated. He said he did not see any scenario whereby the faculty association or university senate would agree to those reductions, and even if they did, it would take years of voluntary departures and those that left might not be those “deemed most appropriate.” If the university followed the rules in the collective agreement the cost would have been about $48-million, Dr. Haché wrote. But under the CCAA, terminated employees will receive only 14 per cent to 24 per cent of the severance they were due.
When the letter was written in late January, 2021, the university knew it was insolvent but hadn’t yet disclosed it publicly. That meant it could not sign faculty’s research grant applications, which contained a clause about solvency. The university was also delaying accepting major donations.
If the university didn’t resort to CCAA protection, Dr. Haché said, bank lenders, who were unsecured creditors on more than $90-million in debt, might try to recover what they were owed by going after university assets in court. He said the legal uncertainty, as well as the threat of a prolonged labour disruption, would be devastating to the prospects of an orderly restructuring.
Dr. Haché did not respond to an interview request Tuesday.
LUFA president Fabrice Colin said the letters confirm the Auditor-General’s findings and prove administrators had planned to circumvent collective agreements and the university senate.
“These documents are shocking in the detail they provide about Laurentian’s secret longstanding plans to gut the university,” Prof. Colin said in a statement.
He said the faculty association is now calling on the provincial government to provide compensation for the faculty and staff who received less than the severance they were due.