Relying too much on external legal and financial advisors led to Laurentian University in Sudbury, ON, filing for creditor protection, according to a report by Ontario Auditor General Bonnie Lysyk. .“Laurentian’s leaders made a bad situation worse by declining government assistance, circumventing obligations to work with faculty and staff, and opting to file for court protection under the Companies Creditors’ Arrangement Act (CCAA),” said Lysyk in a Thursday report. .“A succession of oversight failures allowed the university’s financial health to decline so precipitously the academic careers of 932 students were short-circuited, 341 jobs were lost, and millions of dollars were wasted.” .Laurentian filed for creditor protection amid unprecedented financial challenges in 2021. ."Despite our best efforts over the last year, Laurentian is insolvent,” said Laurentian President and Vice-Chancellor Robert Hache. .Laurentian said filing for protection under the CCAA will allow it to restructure..The report said Laurentian was in a poor financial position because of questionable strategic decisions made by senior administration and a lack of oversight and transparency by the board of governors. It blamed the university’s financial deterioration on senior administrators, which undertook capital expenditures without thinking about how the debt would be repaid. .The report said Laurentian had been using restricted funds on capital projects since 2007. It said it weakened its debt policy in 2010, permitting it to take on more. .The university no longer had sufficient cash and investments to cover its deferred contributions by 2012 or 2013. The board approved a proposal by senior administration to delay eliminating Laurentian’s deficit in 2013, but it rewarded the executive who came up with the plan. .Its main lender refused to issue it more debt in 2016, so it obtained a line of credit it became dependent on for sustaining its cash flow. .The report said the situation progressed because of weak oversight from the university’s board, which lacked important practices and expertise. It added the Ontario Ministry of Colleges and Universities, which was limited by existing legislation and funding agreements, did not intervene in a timely manner to help slow the financial decline. .As Laurentian’s situation became more dire, senior administrators and the board were influenced by external legal and financial advisors to pursue a corporate-style restructuring. Using CCAA allowed the university to bypass provisions in collective labour agreements, clear a number of union grievances, and operate under less transparency. .Lysyk said the audit found senior administrators and the board were “more focused on pushing Laurentian on the CCAA process, and less on working transparently and cooperatively with the ministry.” .“Quite frankly, one has to question whether paying more than $30 million and counting for external legal and financial advisors would not have been better spent educating students,” she said.
Relying too much on external legal and financial advisors led to Laurentian University in Sudbury, ON, filing for creditor protection, according to a report by Ontario Auditor General Bonnie Lysyk. .“Laurentian’s leaders made a bad situation worse by declining government assistance, circumventing obligations to work with faculty and staff, and opting to file for court protection under the Companies Creditors’ Arrangement Act (CCAA),” said Lysyk in a Thursday report. .“A succession of oversight failures allowed the university’s financial health to decline so precipitously the academic careers of 932 students were short-circuited, 341 jobs were lost, and millions of dollars were wasted.” .Laurentian filed for creditor protection amid unprecedented financial challenges in 2021. ."Despite our best efforts over the last year, Laurentian is insolvent,” said Laurentian President and Vice-Chancellor Robert Hache. .Laurentian said filing for protection under the CCAA will allow it to restructure..The report said Laurentian was in a poor financial position because of questionable strategic decisions made by senior administration and a lack of oversight and transparency by the board of governors. It blamed the university’s financial deterioration on senior administrators, which undertook capital expenditures without thinking about how the debt would be repaid. .The report said Laurentian had been using restricted funds on capital projects since 2007. It said it weakened its debt policy in 2010, permitting it to take on more. .The university no longer had sufficient cash and investments to cover its deferred contributions by 2012 or 2013. The board approved a proposal by senior administration to delay eliminating Laurentian’s deficit in 2013, but it rewarded the executive who came up with the plan. .Its main lender refused to issue it more debt in 2016, so it obtained a line of credit it became dependent on for sustaining its cash flow. .The report said the situation progressed because of weak oversight from the university’s board, which lacked important practices and expertise. It added the Ontario Ministry of Colleges and Universities, which was limited by existing legislation and funding agreements, did not intervene in a timely manner to help slow the financial decline. .As Laurentian’s situation became more dire, senior administrators and the board were influenced by external legal and financial advisors to pursue a corporate-style restructuring. Using CCAA allowed the university to bypass provisions in collective labour agreements, clear a number of union grievances, and operate under less transparency. .Lysyk said the audit found senior administrators and the board were “more focused on pushing Laurentian on the CCAA process, and less on working transparently and cooperatively with the ministry.” .“Quite frankly, one has to question whether paying more than $30 million and counting for external legal and financial advisors would not have been better spent educating students,” she said.
