Better to let Laurentian go bankrupt than cancel federated university agreement, lawyer says

Northern reaction to LU's provincial bailout The provincial government announced millions of dollars in new aid for financially insolvent Laurentian University on Thursday.

SUDBURY — The lawyer for the University of Sudbury argued Friday that it would be better for Laurentian University to go bankrupt than to allow it to cancel its agreement with its federated universities.

Ronald Caza said the sole purpose of cancelling the agreement with the U of S is to "choke them out," and eliminate a competitor for students.

He said Laurentian has acted in bad faith from the beginning, pointing out the agreement does not cost LU money.

In fact, they receive 15 per cent of tuition from all U of S students under a 2019 agreement.

"The objective of Laurentian University is to destroy us, and to destroy Thorneloe," Caza said.

"They want to keep all the money for themselves ... How is that acting in good faith?"

Cancelling the agreement is estimated to raise $7 million for Laurentian, and is a condition for the university to access $10 million in emergency funding -- known as DIP funding -- to keep operating until Aug. 31.

Caza said it was frustrating he couldn't question the lenders about why it was necessary, when Laurentian has already saved roughly $30 million in operating costs. He described it as a case of the "tail wagging the dog."

Regardless, he said allowing such "abhorrent" business practices would call into question the integrity of the bankruptcy process.

The damage to the legal system, to French education in Ontario and to the University of Sudbury and other federated universities shouldn't be accepted, he said.

"We are better off having Laurentian go bankrupt if the only thing preventing them from going bankrupt" is accepting the disclaimer, Caza said.

In response, D. J. Miller, lawyer for Laurentian, said there's no question about eliminating a competitor – all students are Laurentian students.

Miller said under the Companies' Creditor Arrangement Act (CCAA), agreements can be disclaimed if they meet certain conditions, which Laurentian has done.

There have been a lot of venting of issues "played out in the press," she said.

"The facts here matter," she said. "I'm going to stick to the facts."

Miller said there are the equivalent of 69 full-time students at the University of Sudbury, three of whom take French language courses at the U of S. Most of its programming is in English, she said.

"Laurentian has approximately 9,000 students, and 20 per cent take French-language programs," she said. "And those numbers have increased."

Miller said the revenue from cancelling the agreements is necessary for LU to successfully restructure. If the U of S motion is granted, it would "ensure no viable plan" can move forward and Laurentian would go bankrupt.

She described it as "mutually assured destruction."

"It's not just an enhancement, it is necessary," she said, of cancelling the agreement. "Laurentian is currently not sustainable under the model we operate … It's not a system that makes sense."

Miller also expressed surprise at Caza's statement that it would be better to let Laurentian go bankrupt.

"Nine thousand students would be displaced? It's just an extraordinary statement."

The case is being heard by Madame Justice Cory Gilmore, Superior Court of Justice, in a bilingual hearing.

A decision is expected by Sunday at 11 p.m. in tandem with a decision on a similar motion by Thorneloe University.

The decision has to come Sunday because that's when a new term begins at Laurentian.