Feds to change law that allowed Laurentian University to declare insolvency

‘Never again’: Laurentian University The fall economic statement contained direct references to LU’s use of the CCAA, changes are coming to prevent post-secondary bankruptcies.

Sudbury MP Viviane Lapointe said Tuesday evening that the fall economic statement includes plans to change the legislation that allowed Laurentian University to declare insolvency.

LU used the Companies’ Creditors Arrangement Act (CCAA) to declare insolvency in February 2021, leading to layoffs, program cuts and the end of its agreement with federated universities.

It was the first time a public institution used the CCAA to restructure, and the move led to an audit by the province that concluded the university had other options, but chose insolvency.

In a news release Tuesday, Lapointe said the feds “will take steps to amend the Act so that post-secondary institutions can no longer access the bankruptcy act as a means of dealing with financial hardships.”

More than 100 professors and 70 staff lost their jobs and a total of 24 programs were cut.

Lapointe said removing the ability of publicly funded institutions, such as universities and colleges, to make use of bankruptcy and insolvency law is crucial.

“In my discussions with university officials, faculty, unions, and community members, all have stated there is a need to ensure this never happens again,” Lapointe is quoted as saying in the release.

“Today, we made it clear that we agree, and are taking the necessary steps to preserve the security of students’ education and the employment of university faculty and staff.”