{"id":10325,"date":"2021-02-08T18:56:37","date_gmt":"2021-02-08T23:56:37","guid":{"rendered":"http:\/\/www.irasmithinc.com\/blog\/?p=10325"},"modified":"2021-05-14T01:22:08","modified_gmt":"2021-05-14T05:22:08","slug":"laurentian-university-creditor-protection","status":"publish","type":"post","link":"https:\/\/irasmithinc.com\/blog\/laurentian-university-creditor-protection\/","title":{"rendered":"LAURENTIAN UNIVERSITY FACING INSOLVENCY MAKES STARTLING CCAA NEWS FILING FOR CREDITOR PROTECTION"},"content":{"rendered":"

We hope that you and your family are safe, healthy, and secure during this coronavirus pandemic.<\/span><\/p>\n

Ira Smith Trustee & Receiver Inc. is absolutely operational and Ira, in addition to Brandon Smith, is readily available for a telephone consultation or video meeting.<\/span><\/p>\n

If you would prefer to listen to the audio version of this Brandon Blog, please scroll to the bottom and click play on the podcast.<\/p>\n

\"laurentian<\/a><\/p>\n

UPDATE MAY 5, 2021:<\/strong>\u00a0 SEE OUR UPDATED BLOG PUBLISHED TODAY ON THE LAURENTIAN UNIVERSITY INSOLVENCY CREDITOR PROTECTION<\/strong><\/em> PROCEEDINGS STATUS – CLICK HERE FOR THE UPDATE<\/a><\/p>\n

Laurentian University <\/i><\/b>introduction<\/b><\/h2>\n

Laurentian University<\/i><\/b> is facing a cash crisis and has filed for <\/span>creditor protection<\/span><\/i>. The Ontario university states that the application under the federal <\/span>Companies’ Creditors Arrangement Act (CCAA)<\/span><\/i> is intended to permit the university to continue running <\/span>day-to-day operations<\/span><\/i> during restructuring.<\/span><\/p>\n

The Sudbury, Ontario school is not shutting down and will continue to provide services for students. It states it will keep normal operations and keep classes running.\u00a0 In this Brandon Blog, I talk about what creditor protection<\/em> in the Canadian context is and why <\/span>Laurentian University <\/span><\/i>did so<\/span>.<\/span><\/i><\/p>\n

Laurentian University<\/i><\/b>:\u00a0 What is <\/b>creditor protection<\/i><\/b>?<\/b><\/h2>\n

In its simplest terms, <\/span>creditor protection<\/span><\/i><\/a> is the protection you get when you start a proceeding with a filing under either the <\/span>Bankruptcy and Insolvency Act (Canada) (BIA)<\/span><\/i> or the CCAA.\u00a0 Under the <\/span>BIA<\/span><\/i>, an individual or company gets that protection in either a <\/span>consumer <\/span><\/i>or <\/span>corporate bankruptcy<\/span><\/i>.\u00a0 This safeguard is also obtained by filing under the <\/span>restructuring proposal<\/span><\/i> provisions of the BIA.\u00a0 A company safeguards itself when it files for <\/span>restructuring<\/span><\/i> under the <\/span>CCAA<\/span><\/i>.\u00a0<\/span><\/p>\n

Once a filing is done, without getting special permission from the court, none of your creditors can start or continue legal action against the person or the company for the repayment of a debt or for any enforcement action against its assets.<\/span><\/p>\n

Laurentian University<\/span><\/i>, therefore, received its sheltering once it made its filing under the CCAA. When using this statute, it can also be called <\/span>CCAA protection<\/span><\/i>.<\/span><\/p>\n

Below is the section titled “<\/span>How the Laurentian University restructuring story<\/i> begins”.<\/a> I discuss its particular issues leading up to the need to file.<\/span><\/p>\n

Laurentian University<\/i><\/b>:\u00a0 <\/b>What is a stay period?<\/i><\/b><\/h2>\n

The “time out” that a person or business gets from its creditors is called a <\/span>stay period <\/span><\/i>(<\/span>Stay of Proceedings<\/span><\/i>).\u00a0 Upon the agreement of the court to the initial filing, the result is that <\/span>the court will issue an Order giving the company an initial 30 days of <\/span>protection from creditors<\/span><\/i> to allow for the preparation of the <\/span>restructuring proposal<\/span><\/i> called a <\/span>Plan of Arrangement<\/span><\/i>.\u00a0 <\/span><\/p>\n

This initial stay can be extended by the court, as long as the judge is convinced that the company is acting in good faith and working expeditiously in sorting through the myriad of issues stopping it from putting together its <\/span>Plan of Arrangement<\/span><\/i>.<\/span><\/p>\n

Laurentian University:\u00a0 <\/i><\/b>What does CCAA mean<\/i><\/b><\/h2>\n

The CCAA is a Canadian federal law that helps companies in financial difficulties emerge from its difficulties. The company begins its reorganization proceeding with its <\/span>application<\/span><\/i> to the court and files for <\/span>creditor protection<\/span><\/i><\/a> to avail itself of the process for a company and its creditors to come to an agreement on how to reorganize the company’s debt, while the company continues to operate normally and pay amongst other things, wages to its employees.<\/span><\/p>\n

One of the biggest advantages of the CCAA is that it allows a business to \u201chold the fort\u201d while the creditors and the company work out an agreement that will hopefully get the company back on its feet. While operating in this fashion, company management remains in control of running the business.\u00a0 The company does not hand over its assets to a <\/span>licensed insolvency trustee (Trustee)<\/span><\/i><\/a>.\u00a0 Rather, the Trustee is appointed by the court to act as <\/span>Monitor<\/span><\/i>.\u00a0<\/span><\/p>\n

As the title sounds, the role of the Monitor is that of the neutral court officer working with the company.\u00a0 The duties of the Monitor include:<\/span><\/p>\n