Federal government to amend laws so post-secondary institutions aren't subject to CCAA proceedings

The federal government is proposing to amend legislation to exclude public post-secondary institutions from becoming the subject of insolvency proceedings, according to an update in the fall economic statement, released Tuesday.

The statement proposes the federal government will amend both the Companies' Creditors Arrangement Act (CCAA) and the Bankruptcy and Insolvency Act, so colleges and universities can avoid the same fate as Laurentian University.

In February 2021 Laurentian filed for insolvency, and under CCAA proceedings it cut 69 programs and nearly 200 staff and faculty members lost their jobs.

In a press release, the Ontario Confederation of University Faculty Associations (OCUFA) said it welcomed the news.

"OCUFA and its member organizations and allies have worked for years to secure this change to bankruptcy legislation through public campaigns and lobbying efforts," said  OCUFA president Nigmendra Narain, in a statement.

"Canadians across the country know how valuable our world-class public university system is, and we know that these reforms will help protect our public universities and help them thrive."

In Sudbury, Tom Fenske is the president of the Laurentian University Staff Union. 

He was relieved to hear the news.

"This is just a way to make sure that there is no insolvency lawyer in the world or in this country that's going to start whispering in the ears of public sector universities or colleges and leading them into this anymore."

In Ottawa, Timmins - James Bay MP Charlie Angus is marking this as a victory, although the proposed amendment doesn't go as far as Angus would like.

In December of 2022, he introduced a bill to save public institutions such as universities and hospitals, from insolvency proceedings designed for commercial enterprises.

"The decision to use the CCAA at Laurentian was without precedent and it had disastrous consequences," Angus said before he introduced Bill C-309 in the House of Commons.

"It is essential that we have legislation in place that ensures that no institution that receives federal or provincial funding can be subject to the Companies' Creditors Arrangement Act, or CCAA, if they find themselves in financial difficulty."

On Tuesday after the Fall Economic Statement was tabled, Angus said he'll be reaching out to Deputy Prime Minister Chrystia Freeland to take steps to put the changes into effect.

"People could never have imagined that Laurentian's board would have used this nuclear option that wiped out so much opportunity in the north, it was just unfathomable that the bankruptcy, the creditor protection act would have been used in that means against an institution like a university, said Angus.

"So now that we have that precedent we know it can be used again and it cannot be allowed to happen."

In a statement, Sudbury MP Vivianne Lapointe said the CCAA process should not have been used for Laurentian.

"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 said.

"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."

In her special report on Laurentian University last year, Ontario Auditor General Bonnie Lysyk argued the CCAA process was never meant for public institutions, and was an inappropriate way for Laurentian to deal with its financial challenges.