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Students outside the R.D Parker building on the Laurentian University campus in Sudbury, Ont., on Sept. 12.Fred Lum/The Globe and Mail

Laurentian University has cleared a key hurdle in its attempt to emerge from insolvency after creditors voted in favour of a plan that would see the postsecondary institution repay a fraction of the money it owes.

The stakes were high ahead of Wednesday’s vote. Participants were told that if they rejected the proposal, the Sudbury university would potentially be dissolved, with staff facing termination and students forced to continue their education elsewhere.

In order to be approved, the plan needed the support of more than 50 per cent of individual creditors, and those voting in favour had to hold more than two-thirds of the total debt. More than 87 per cent of individual voters approved the plan, and their votes represented 69 per cent of the outstanding debt.

Laurentian University board chair Jeff Bangs was visibly relieved after the result was announced. He said the campaign to secure a “yes” vote had given him many sleepless nights.

“After today we have the chance to rebuild,” Mr. Bangs said. “We can start to take back control.”

Laurentian became the first publicly funded university in Canada to file for insolvency in February, 2021. As part of its restructuring, the institution terminated nearly 200 professors and staff and eliminated nearly 70 academic programs.

The terminated faculty made up a significant portion of those eligible to vote on the proposed plan. The result means they and other creditors will have to accept repayment of between 14 and 24 per cent of what they are owed. For many of the long-time employees, the amounts they are due in severance exceed $500,000. Similarly, banks and local businesses were also among those owed amounts that ranged from millions to a few thousand.

Mr. Bangs paid tribute to those who voted to accept the deal as well as those who did not, recognizing the difficult circumstances of such a vote in a small community.

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Faculty association president Fabrice Colin deemed Wednesday the start of a new chapter for Laurentian. Both the faculty association and the staff union had joined with the university administration in asking for a “yes” vote, but he recognized that for many it would a hard pill to swallow.

“Creditors are receiving only a fraction of what they are owed,” Mr. Colin said.

Eduardo Galiano-Riveros, a professor who lost his job in the insolvency, is the spokesperson for a group of terminated faculty that campaigned for a “no” vote.

He said the result was much closer than expected and shows that many people disapproved of the outcome. He vowed to continue to work to expose what went wrong at Laurentian and who was responsible.

“This was not a landslide,” Mr. Galiano-Riveros said. “The fight goes on.”

On campus, the reaction to the vote was muted. There were no gatherings to celebrate the result, but several people expressed relief that the university had survived this step.

“This means that we can move forward and get out from under the yoke of the court appointed monitor, who has basically been in financial control of the university,” said Albrecht Schulte-Hostedde, a professor of ecology.

He said he remains deeply upset about the damage to the university’s reputation and the loss of so many programs and colleagues, though some kind of rebuilding can at least begin.

Dax Law, a fourth-year psychology student, said he welcomed the result.

“This place is absolutely critical to Sudbury, to the North. We should make every effort to preserve it,” he said.

Mr. Bangs, a public-affairs consultant who was appointed chair of the board earlier this year, said the court and the Ontario government would continue to play important roles overseeing the university’s plans in the months and years ahead.

The plan to pay creditors was made possible by the Queen’s Park decision to buy more than $50-million in real-estate assets from Laurentian.

Mr. Bangs said the province and the monitor will continue to be like “big brother and big sister” overseeing the university’s plans as it moves to regain control of its affairs. He said Laurentian now has to build the muscles required to walk and then run on its own, which will mean better governance and keeping a careful eye on student demand as it chooses where to hire new faculty.

Nearly all of the university’s board has been replaced since the insolvency proceedings began, Mr. Bangs said.

The university’s president, Robert Haché, and its provost, Marie Josée Berger, have announced this summer they will retire before the university emerges from the insolvency process.