Laurentian University’s creditor-protection plan offers a recent lease on life, but big challenges ahead

Janice Liedl, a professor of history at Laurentian University for 30 years, can’t help but notice how her university has modified.

The constructing that she works in, situated at the guts of the university’s Sudbury, Ont., campus, is one-third empty now. When she walks the halls she passes closed doors with a blank space where an occupant’s name plate needs to be. There are fewer professors and fewer lectures on the go.

“It was once a fight to search out a classroom. It’s less a fight as of late,” she said.

When Laurentian declared insolvency in February, 2021, Dr. Liedl kept her job. But her department vanished. Greater than 100 of her tenured colleagues were fired and dozens of educational programs were slashed. The longer term of your entire university, a lynchpin in Sudbury and Northern Ontario, was solid doubtful.

Reasonably than receive a financial bailout from the provincial government, as other struggling universities have done up to now, Laurentian filed for defense under the Corporations Creditors Arrangement Act, a law designed for personal corporations that permits considerable leeway to terminate employees and cut costs. It had never before been applied to a publicly funded university.

On Sept. 14 of this yr, the university’s creditors voted to approve a plan of arrangement that may settle the university’s debts at a fraction of their value. The result’s a relief to the university’s administration and to its staff and school. Had the vote failed, the university said its only option would have been to dissolve.

Dr. Liedl said it appears like Laurentian, having survived a brush with death, is perched on a ledge. It’s not home protected, but it will probably catch its breath and consider its next move.

The scholars arrived this September with a renewed optimism after two anxious, pandemic-interrupted years, Dr. Liedl said. The campus they’ve returned to is a modified place. The senior leadership is poised to depart, because the president and provost have said they’ll soon retire after faculty pushed for his or her ouster. Enrolment is beginning to stabilize, but applications from Ontario highschool students were down 40 per cent this yr, an indication of the damage inflicted on the university’s brand.

And there are still questions that should be answered: Who created this mess? Why did nobody see it coming? And in any case the damage done, can the university be rebuilt?

The trail out is removed from assured.

The Laurentian campus sits between a lake and a nature preserve, surrounded by the dramatic outcroppings of the Canadian Shield. The air smells of cedar and spruce and students can weave their option to class on paths cut through the northern forest. In-built the Nineteen Sixties, it has about 8,000 students and a mandate to supply accessible post-secondary education within the bilingual and tri-cultural – francophone, anglophone and Indigenous – context of Northern Ontario.

When president Robert Haché took up his post at Laurentian in July, 2019, the university had stubborn annual deficits of a couple of million dollars and long-term debts of greater than $90-million. However the attitude around campus was that Laurentian would muddle through, just because it at all times had.

The university had much to have fun at that time. Its students had the very best post-graduation employment rate within the province, based on Dr. Haché, and amongst the very best starting salaries. It also had one in all the most important populations of scholars who’re the primary of their family to attend university.

When COVID-19 forced campus to shut in March, 2020, Dr. Haché sounded an alarm. He said the pandemic could threaten the viability of the university. By October he was saying Laurentian had reached a fork within the road: it could proceed to aspire to being a frontrunner in research, or it could refocus as a smaller, undergraduate university.

Most of the issues the university faced were slow-moving and well-known. The demographic situation in Northern Ontario is unfavourable, with little to no growth within the university-aged population. Other small universities which have fared higher financially have built satellite campuses near the booming Greater Toronto Area.

Laurentian tried to expand in Barrie, but in 2016 the previous provincial government didn’t support the university’s plans to grow within the region and Laurentian eventually closed its Barrie campus.

International students, whose higher tuition fees have turn into an important revenue source at nearly every Canadian university, didn’t flock to Sudbury. The largest cohort at Laurentian got here from Saudi Arabia and when a diplomatic spat erupted with the Canadian government in 2018 nearly all left. Before insolvency Laurentian drew only about 3 per cent of its student body from abroad, badly trailing the national average of greater than 15 per cent.

The 2019 Ontario government decision to chop domestic tuition fees by 10 per cent and freeze them for 2 years further dented university funds.

But the massive blow appears to have been a campus modernization program that cost greater than $60-million, with recent buildings and renovations to existing ones. The constructing spree greater than doubled the university’s debt without bringing in much recent revenue or enrolment. On the time, Laurentian was led by the youngest university president within the country, Dominic Giroux, who was hailed as a wunderkind former civil servant without the normal academic background his post normally requires. He left in 2017 and now leads Sudbury’s Health Sciences North. Mr. Giroux didn’t reply to interview requests.

Former board chair Claude Lacroix also didn’t reply to interview requests, and Dr. Haché declined requests citing the continuing court process.

An Ontario legislature committee on public accounts, in search of answers on what happened at Laurentian, passed a motion in 2021 asking Auditor-General Bonnie Lysyk to conduct a special audit of the university’s operations. A preliminary report from Ms. Lysyk this April called the campus constructing boom of the 2010s a dangerous “construct it and they’re going to come” strategy that was the first reason for its financial deterioration. She described poor financial management within the administration and weak oversight from the board.

Ms. Lysyk also concluded that insolvency might have been avoided if university administrators had taken steps to hunt a bailout and work with the provincial government, as other universities in similar situations have done. As a substitute, she concluded, the university deliberately selected the unconventional path of the CCAA.

Steven Meyer, who was until last yr a professor of geography, vividly remembers the moment he began to wonder about Laurentian’s viability.

He was looking his office window at what struck him as one other improbable constructing project when an e-mail from the administration arrived asking staff to stop printing documents to save lots of the fee of paper.

“I’m just taking a look at all this construction and I get this memo across my desk saying you’ve got to stop using paper,” he said. “It almost felt surreal.”

By all outward appearances the university was thriving. The campus looked higher, and researchers were establishing recent labs.

“Little did we all know they’d no ability to afford this,” said Dr. Meyer.

In April, 2021, he and greater than 100 other colleagues – all of them tenured academics – together with about 80 staff members, lost their jobs. They were fired via Zoom.

Greater than a yr and a half later, Dr. Meyer said a lot of his colleagues are still struggling to come back to terms with it. Their careers and livelihoods were sacrificed to offer the university a shot at survival.

Dr. Meyer, now retired at 58, was due greater than $600,000 in severance, but under the plan of arrangement approved on Sept. 14, he’ll get only 14 to 24 per cent of what he’s owed. Still, he voted in favour, together with greater than 85 per cent of the university’s other creditors.

There had been a full of life debate, he said, about whether to vote down the proposal and call the bluff of those that said the university may very well be dissolved if the vote failed.

“As bad because it is I’m undecided we could do any higher,” Dr. Meyer said. “I’m not sugar coating this, we’re getting screwed. But I assume I’m taking the broader approach. Sometimes in life you get the sharp end of the stick.”

Dr. Meyer said he still enjoys hearing from students, writing reference letters and providing advice, but he has largely moved on from his old profession. He knows of colleagues still struggling to recover from how they were treated. He suspects some may never get well.

“We’re being sacrificed so the institution can go on,” Dr. Meyer said. “The lion’s share of this restructuring is occurring on our backs … But am I comfortable Laurentian goes to go on? After all I’m. There’s way an excessive amount of at stake for the town for this university to stop.”

There’s absolute confidence students have been affected by the restructuring process.

For college students like Cheick Sangare, a 22-year-old from Côte D’Ivoire, the lack of courses taught in French has made it almost unattainable for him to finish his degree in business administration.

“I really need to complete my studies on time and graduate,” he said. As a global student, he’s paying nearly $30,000 a yr in tuition so delaying graduation by even one semester is financially difficult.

He said the difference between the choices available before and after the cuts of last yr is “enormous.”

“It’s disappointing,” he said. “Sadly, for those of us in upper years, there just aren’t enough courses.”

El-Hadji Diop, who can be studying business and works for the francophone student association, has had an analogous experience. “My first yr I could take what I wanted: philosophy, journalism, sociology,” he said. “Then they cut the programs. It’s hard to search out courses. Principally, I don’t have many options.”

Avery Morin, the president of the Laurentian Student General Association, said for a lot of students the larger picture of the university’s funds will not be top of mind. Many are simply focused on pursuing a level, and so long as classes are offered they trust the university will still exist in the longer term.

She said she selected to check at Laurentian because she desired to stay near home.

“I’m very comfortable here, it’s a chance to remain near my roots,” she said.

In June, the federal government said it might spend as much as $53.5-million to buy a few of Laurentian’s real estate, a key decision that provided the funds that made the plan of arrangement possible. The proposed real estate sale could include buildings used primarily by one in all the university’s former jewels, the Northern Ontario School of Medicine. The medical school began as a three way partnership between Laurentian and Lakehead, but was made its own separate university last yr partially to guard it from the insolvency process.

Alan Thrasher, a third-year kinesiology student, said he worries that the necessity to raise money will result in the sale of the lands that surround the university, currently the positioning of dozens of kilometres of walking trails and nature preserve.

“This university is significant to Sudbury,” Mr. Thrasher said. “I’m frightened that they don’t have a plan to get out of debt.”

Virginia Torrie, a professor of law on the University of Manitoba and the writer of a recent book on the history of the CCAA, said there isn’t a empirical evidence tracking how successful the CCAA process has been for the entities which have undergone it over the medium to long-term. It’s not unusual for corporations that undergo restructuring to do all of it again a couple of years later. There’s no guarantee Laurentian will find a way to come back out the opposite side.

It’s also not known whether there might be a technique of accountability that might determine who was liable for this mess.

Jeff Bangs, who was appointed chair of the Laurentian board in January, said the university has a chance to show the page. He said in the approaching weeks Laurentian, which now has an almost entirely recent board, can begin to “take back control” of its administration, which has been closely overseen by a court-appointed monitor in the course of the insolvency process. He said the monitor and the provincial government will each have input within the university’s next steps.

The auditor-general will issue a final report on Laurentian in the approaching months that may offer some guidance, he said

Within the meantime, Mr. Bangs said he intends to start the technique of rebuilding the university’s faculty complement and its program offerings. But it is going to take time and each decision will need a business case, he said. “We let quite a lot of people down. Now’s the prospect to turn into a shining example of methods to run a university properly,” Mr. Bangs said.

Laurentian will soon announce a recent interim president and the method will begin to search out a everlasting alternative for Dr. Haché, Mr. Bangs said.

He also hopes that student recruitment can begin to speed up, now that students can have greater confidence in Laurentian’s long-term future. However the damage to the university’s brand has been substantial.

Application data show that student confirmations in September were up barely, thanks largely to international applicants. But applications from Ontario highschool students, who’ve traditionally made up the lion’s share of Laurentian’s student body, were only 2,900 this yr, down from 4,900 a yr ago and 5,680 in 2019, a drop of nearly 50 per cent.

Dr. Liedl said she spent much of the past yr attempting to help students whose programs had vanished complete their degrees. For some, that meant cobbling together enough courses from the remaining options to graduate. For others, it meant changing programs or transferring to a different university. Laurentian estimates that roughly 900 students had their course plans disrupted.

Dr. Liedl’s history department was dissolved. She was named director of a recent school of Liberal Arts, however the variety of tenured faculty in the humanities and humanities has been drastically reduced, she said. Subjects reminiscent of philosophy and political science and Indigenous studies have lost all or nearly all their tenured professors.

She worries that in its next phase the university will present itself primarily as a mining and engineering school and narrow its offerings, particularly on the expense of the humanities.

“We lost a few of the core elements of the university,” she said. “[Laurentian] built for an optimistic future when we must always’ve been constructing for a future we could reasonably create.”