According to the Ontario Auditor General, instead of resorting to the Companies’ Creditors Arrangement Act (CCAA), Laurentian University could have worked with the Ontario government and its unions to resolve its financial problems. Bonnie Lysyk made this assessment as part of a report commissioned by Ontario lawmakers, which described the CCAA’s deployment as “strategic” and “planned.”
Laurentian University turned 1ah February 2021. The establishment was then facing significant financial problems with more than $87 million in debt. By resorting to a law normally reserved for private companies, the university was able to eliminate 69 programs; 29 of them were French speakers. In April 2021, Ontario French Language Services Commissioner Kelly Burke found that by dropping some of these French-language programs, the university had violated the province’s French Language Services Act.
The Auditor General’s final report is months overdue. On April 13, about two weeks before the Ontario legislature was dissolved for provincial elections, Bonnie Lysyk’s office released a preliminary report in which she came to similar conclusions. However, the document released today is more substantive and includes the Auditor General’s reasoning. On April 28, 2021, the Standing Committee on Public Finances requested an audit of the entity’s operations.
According to the Auditor General, the idea of using the CCAA had been germinating for more than a year before the university officially called for it. An outside legal advisor presented the idea to the institution in mid-2019. In March 2020, the university again commissioned lawyers to review strategic options for solving financial problems. On both occasions, however, the focus was “always on applying for protection under the CCAA.”
In August 2020, Laurentian told the Department of Colleges and Universities directly that it was considering using the CCAA. The department then reportedly offered a third-party financial review to find ways out of their mess. The university proposed auditing firm EY to conduct the review, but the company, which eventually became a monitor in the CCAA process, backed out. “Neither the Department nor Laurentian have proposed another financial advisor for this role,” the Auditor General’s report said.
In the two years prior to the CCAA’s inception, Laurentian University or its associates allegedly circumvented or violated provincial law. The college has not submitted lobbying filings since 2010, although between 2020 and 2021 “a number of staff” met with ministry officials to influence government decisions or seek financial support. The Auditor General suggests that this violates the Lobbyists Registration Act.
Laurentian also “violated the province’s wage restraint law for employees in the broader public sector, compensating senior executives $389,000 more than the law allows,” Bonnie Lysyk also wrote in her more than 100-year report. In addition, according to the report, there was a lack of fairness or demonstrable justification in the hiring of executives. The creation of some managerial positions was not clearly justified and the selection of successful candidates was “insufficiently” supported.
Fight for transparency
Bonnie Lysyk’s office has had to fight tooth and nail to get the job done for the last two years. The Auditor General attempted to obtain certain confidential documents to complete her examination, but Laurentian refused to give them to her. In January, the Supreme Court ruled that the institution did not have to release the documents because the Auditor General Act did not allow the incumbent to access information protected by attorney-client privilege. Bonnie Lysyk appealed to the Court of Appeal on Tuesday and is now awaiting her decision.
The restructuring process, which cost the jobs of 195 staff and faculty members and affected 932 students, ended almost two months ago. The institution’s creditors voted in favor of a settlement plan, which was subsequently recognized by the court. The majority of creditors receive around 14-24% of the compensation they are entitled to. Comptroller EY had hinted that the university could close if creditors vote against the settlement plan.
This story is supported by the Local Journalism Initiative, which is funded by the Canadian government.