Laurentian creditors to vote Sept. 14 on debt repayment plan

A powerful committee of the Ontario legislature moved Wednesday to try and force Laurentian University to hand over privileged documents to the province's auditor general. (File)

Unsecured creditors of Laurentian University will vote Sept. 14 on a proposal to settle debts, following a ruling from the Superior Court of Justice on Thursday.

There will be a virtual meeting of creditors at 10 a.m. to vote on the plan of arrangement, as the proposal is called under the Companies' Creditors Arrangement Act.

If the majority of creditors approve the plan, the university will then seek a final court approval Oct. 5, after which it will emerge from insolvency.

As part of the plan of arrangement, the province will buy $53.5 million in real estate from LU, money that will be used to pay creditors.

While the province will own the real estate, LU will continue to have the same access to the property. The province is also lending LU about $35 million to pay off private-sector lenders that advanced the school operating funds while it was in the insolvency process.

Creditors will be repaid using the $53.5 million in the real estate sale. A smaller group dubbed priority lenders will be repaid in full, while the majority of groups still owed money – dubbed 'affected creditors' -- will be repaid at a rate of between 14.1 cents and 24.2 cents on the dollar.

Jeff Bangs, chair of Laurentian University's board of governors, said in a news release Thursday that the university is ready to move forward.

“Our students, faculty and staff, industry and our community feel a renewed optimism and pride for a strong and transformed Laurentian University,” Bangs said.

For more information on the proposed plan of arrangement, click here.