(Sudbury – February 11, 2021)
FREQUENTLY ASKED QUESTIONS
I. THE INSOLVENCY PROCESS AND CCAA PROCEDURE
II. LUFA/APPUL BARGAINING, C.A. LANGUAGE, LABOUR RELATIONS
III. SALARY, BENEFITS
IV. PENSIONS
V. RESTRUCTURING – POTENTIAL CONSEQUENCES
VI. BOARD OF GOVERNORS – UNIVERSITY ADMINISTRATION
VII. PROVINCIAL GOVERNMENT
VIII. STUDENTS
IX. RESEARCH GRANTS
I. THE INSOLVENCY PROCESS AND CCAA PROCEDURE
Q: Why didn’t the 4 associations (LUFA, LUSU, CUPE, LUAPSA) get standing in front of Justice Morawetz on February 1st?
The short answer is that the only party at the initial hearing was the one seeking insolvency – the employer – in this case, Laurentian. Other parties had their say at the so-called “Come-Back” hearing on February 10th. At this hearing, impacted groups have the ability to challenge an employer’s claim that it is insolvent as well as the related court orders.
LUFA will also have input at the follow up discussions and with the appointed mediator in the process of developing the restructuring plan.
Q: Why does the CCAA supersede Ontario labour relations law? Doesn’t the Charter provide protection against employers using bankruptcy to rid themselves of CAs (collective agreements)? And can’t LUFA file an injunction at the Labour Board? Or call for intervenor status by the Labour Board?
The CCAA doesn’t supersede labour law in itself. However, there is a “stay” of all legal proceedings which essentially prevents LUFA and other entities from pursuing the University through legal channels.
This means that LUFA cannot grieve, raise a Charter challenge, file a bargaining in bad faith complaint or any other complaint at the Labour Board, file a judicial review, or engage in any civil proceedings.
Q: Why are we only talking about faculty? Just like many universities, the ratio of VPs, staff, etc., has been growing while faculty numbers are dropping. Can staff be affected as well (they recently signed a new CA)?
We can suppose (or hope) that these questions (regarding administration) will come up under the “restructuring plan formation stage” and will be examined by the court, the monitor, and the court appointed mediator. And yes, unfortunately, even after LUSU gave concessions last year, LUSU
members may be affected and we can suppose it is likely that they will feel the effects of these developments.
Q: How can the university claim it is “insolvent?” It has secured government funding, it has tuition revenues, it has government grants, it has endowment funds. None of these suggest insolvency nor do they suggest that the Ontario government is insolvent.
Unfortunately, while we may be skeptical, it’s not simply a mere claim or assertion. There is a test that must be met to establish “insolvency,” and Laurentian was able to meet (or prove) that legal test.
Q: How can the Province allow a public body to be subject to the CCAA? Was the Province involved with the CCAA court? Will the Province be a party to the proceedings? Does the Province have a responsibility to verify that its boards are managing their funds appropriately–after all, the Province ultimately controls the Board appointment process.
The CCAA is federal legislation that any corporation (which LU, at law, is) can avail themselves of, provided they can meet the tests as set out in that legislation (and as set out in the Applicant’s factum– the first parts of which are the setting out of the material “facts” that establish that LU meets the legal conditions for claiming insolvency). The provincial government still has ultimate legislative authority over LU. They could theoretically use that to “take over” the institution and run it from Queens Park. But it seems unlikely they would take this step. We hope that the Province will take an active role in the CCAA proceeding.
Q: Is there any protection against anyone benefiting personally from such a multi-million dollar buyout?
Yes. There is a Monitor appointed by the court. A Mediator has also been appointed to lead the discussions between LU and LUFA and other interested stakeholders and parties. A final plan of arrangement or compromise must be approved by the court.
II. LUFA/APPUL BARGAINING, C.A. LANGUAGE, LABOUR RELATIONS
Q: How did the admin avoid invoking the exigency clause? Clause 10.15.6 requires them to turn over their books within 2 days. The Ernst and Young report lacks detail.
The insolvency order effectively suspends the collective agreement terms. Their argument is in part that they simply do not have the time or money to go through those processes.
Q: Was this article of the CA respected: 10.15.7 Within fifteen (15) days of the notice specified in Article 10.15.5 above, the Parties shall establish a Financial Commission which will consider the alleged financial exigency and either (a) confirm it (under whatever conditions it chooses to impose) or (b) reject it.
No. See above.
Q: Will LUFA still file a complaint re: bargaining in bad faith, as this is what happened? Admin delayed sharing all financial information with LUFA and issued it just before filing for insolvency
The insolvency order prohibits this because all legal actions against the employer (among other things) are legally “stayed” (suspended).
Q: Has LUFA reviewed any options beyond April 30th (the 3-month period to restructure)?
At this time, no. Our primary focus was on our February 10th court filing and how we will approach the restructuring discussions.
Q: Despite this situation, what does it mean for our bargaining…and/or eventual strike?
“Bargaining” is now taking place under the terms of the CCAA order and our ability to strike has been suspended or “stayed.” The Mediator, Justice Sean Dunphy, was appointed on February 5th.
Q: What about pending grievances? Is everything stopped?
Yes, there is a stay of proceedings so all hearing and mediation sessions have been suspended. The grievances have not been dismissed. They will be included in the discussions regarding the restructuring.
Q: Do we continue to work? Is there any pay for February and the remaining 3 months?
Yes, we continue to work. There have been no layoffs. The Administration has secured a DIP loan to allow them to continue to meet payroll obligations until April 30th.
Q: In terms of actions on our part – do we start refusing certain duties, particularly if we don’t get paid?
You will be paid and should continue with your normal duties between now and the restructuring period (April 30th).
Q: Is this compressed timeline part of the admin’s strategy?
We cannot know that at this time.
III. SALARY, BENEFITS
Q: Will we be getting paid after February/April?
Under the insolvency order the administration has secured an interim loan of $25 million to finance the operations of the university until April 30th, the period of restructuring. Right now we’re unclear what will happen after that period ends.
Q: If I sign a contract to teach in the Spring term as a sessional, might I be required to teach without payment?
No. No one can be forced to work without compensation in Ontario or anywhere in Canada. The Administration has indicated that sessional contracts have been signed for the spring.
Q: What about extended medical benefits and coverage of medications?
Medical benefits remain in place.
Q: What about the initial Court Order, provision 8 (bottom of p. 3), “the Applicant shall be entitled but not required to pay…all outstanding wages, salaries, employee benefits, etc.” Since they are obtaining debt funding, we would expect that the University meets these obligations–right?
Yes, it is the expectation that the employer will meets its obligations with respect to Salary and Benefits until April 30th.
Q: Are we able to access our professional allowances for now?
According to a memo from the VP Administration, “No reimbursements will be paid at this time, and prior year carry-forward balances are also frozen as of February 1, 2021.”
IV. PENSIONS
Q: Can creditors make a claim against the defined benefit portion of our pension plan of a member who has not yet drawn on their pension? In this case, the pension has not yet vested. The member’s rights to pension benefits are a contingent future interest.
The simple answer to both questions is no–creditors cannot make a claim against the DB (Defined Benefit) pension fund. This is not a pool of assets that is available to creditors. In Ontario, members are immediately vested in their pensions. Pensions are generally only reduced where the pension plan is totally wound up and there are insufficient assets to satisfy obligations and the sponsor is insolvent. We are a long way from any or all of these events coming to pass, and at the moment there is no suggestion or proposal that in any way impacts current or future pensions.
However, things get murkier in an insolvency, when a defined benefit pension plan is underfunded, and the employer (i.e. Laurentian) is unable to make the ongoing payments necessary to adequately fund the plan into the future. The University’s funding obligations may be compromised.
Q: If LU no longer has to pay the DB shortfall, does that affect those members who have already taken their pension? What will be the likely impact on the DB (10%, 50%)?
The short answer is that we don’t know whether there will be any impact on active members, deferred- vested members or retirees, but we can say that cuts to pensions are a very last resort and generally only happen when there is a total plan wind-up. This isn’t our present situation.
Q: Can creditors make a claim against the defined benefit part of our pension plan for a member who has not yet taken pension? What about a member that has already taken a pension?
No. These are basically trust funds and beyond the reach of creditors.
Q: Is there any problem or deficit in the pension programs? Did the University short those too?
According to the material filed by the University, the DB Pension Plan had a solvency ratio of 85.4% as at December 2020, representing a going concern deficiency of approximately $4.5 million.
Q: Will upcoming sabbaticals be affected?
No information is available on future terms and conditions of employment. The CA will be renegotiated through the mediation process.
Q: If there is forced retirement, does that come with severance?
LUFA will be arguing that some severance and compensation “in lieu of proper notice” should be forthcoming in the event that members must be laid off or forced into retirement, but it’s premature to provide accurate information on these issues.
Q: Are you saying that as the benefits money has been spent that there are no more benefits for retirees?
We don’t know, but it appears that the funds for the RHBP were not held in trust and were comingled with other funds. The Administration has ceased all payments under the RHBP effective February 1st. The future of the benefit plan will be addressed during the restructuring discussions.
V. RESTRUCTURING – POTENTIAL CONSEQUENCES
Q: Does “insolvency” mean that LU admin can “restructure” LU? Does this mean that the administration can ultimately cut and fire both faculty and staff? In terms of actions on our part, do we start refusing certain duties?
The short answer is yes, there will be faculty job losses. The administration has clearly sought the power and a wide grant of discretion to restructure, and that includes the power to terminate employment. At this moment we must keep doing our jobs, for the simple reason that they will be paying us for our services.
Q: What is the union thinking about how to deal with the job losses of members? Who would be the first to go under this type of process?
At this early stage, LUFA is still formulating a response and is just turning its mind to this very difficult discussion and decision matrix.
Q: You have mentioned “mediator” and “negotiations.” What kind of negotiations will there be between LUFA and the administration? Or can the university simply “impose” cuts?
There is a court-appointed Mediator who is working with the parties. “Negotiations” in this context is a bit different, since LUFA does not have the ability to strike–but certainly LUFA will attempt to represent members in the strongest way, with the interests of its members. The reality is that
yes–a restructuring plan can be imposed, the only limits being what the majority of creditors will accept in a “vote” and what the court will ultimately accept and approve.
Q: Will LUFA be able to present alternate plans for restructuring?
At this point we expect to be involved in the discussions about this–at least through the appointed mediator.
Q: Some faculty could move into other departments/programs, depending on specialization. It’s disturbing that the door is closed at least in terms of the language in the document.
At this stage we are unclear about what the administration is considering. But certainly LUFA will make the point that faculty should be able to transfer to other departments or programs
VI BOARD OF GOVERNORS, UNIVERSITY ADMINISTRATION
Q: What about the previous administration? Can they be held to account?
Indeed, there should be some mechanism to hold them to account. At this stage we do not know what that might be, but we will explore the possibilities.
Q: Dominique Giroux used to boast about balancing the budget year after year, what did that mean when the university was in debt?
It appears that this is a continuation of the longstanding problem LUFA has had with regard to a lack of transparency, openness, and collegial governance.
Q: What happens to the accounting firm KPMG that audited or provided a financial statement each year?
We share your concern, and will be seeking answers.
Q: What if the Board of Governors (BoG) have not been receiving the whole picture?
We share your concern. This is a matter that won’t be addressed between now and April 30th. This is an issue between the Board of Governors and the university administration. However, the BoG has a fiduciary duty to be informed.
Q: Will the public (including us) get the details of the financial situation and/or the results of the ABC analysis? The data in initial documents are way too general, no details in the sources of debt/financial loss.
Our understanding is that most documents will be made available on the Monitor’s website. Here is a link to that page.
Q: What about suing the Board? They have insurance, no?
According to the court order, no action may be taken during the restructuring period (now to April 30th).
Q: Is it time to think about downsizing the administrative behemoth we currently have? I remember a time when LU had only 2 VPs. Growth there, along with their offices and staff, have made us very top heavy.
Yes. We agree.
VII. PROVINCIAL GOVERNMENT
Q: Is blaming the government the best strategy? For the most part, we deal with the same provincial parameters as every other Ontario university. Is attacking the government the best course of action? Should we not be focusing on the mismanagement by the Board and Sr. Administrators?
At this stage probably not. It is unclear what the government knew and when it knew it.
Q: Why would the government give more money to an incompetent fiscal management team?
We have been pushing for collegial governance and financial transparency for many years. This is the result of decision-making behind closed doors.
Q: Is the government considered a stakeholder/creditor in any way, and can they be held responsible and forced to concede financial contribution to the plan?
No, not unless contributions from them took the form of loans to the institution.
VIII. STUDENTS
Q: What are Laurentian’s obligations to students who are in mid-stream or close to graduation (especially graduate students)?
We will continue to support our students and continue to do our jobs – we will teach and mentor our students, because they are our primary focus. The administration is equally committed to maintaining its obligations to students. It is our view that Senate continues to operate and can
oversee some of these requirements. Faculty have access to that process to make necessary amendments to assist the students. This was recently achieved with the closure of programs at Thorneloe.
Q: Will this initiation of insolvency not ensure a drop in future enrollment? Who would want to apply to a university in such a dire financial condition with tenuous programs?
That may well be a logical outcome.
Q: Some students are not in a position to transfer to another institution without a restart. How can we make sure they’re protected?
Frankly, we are unsure that we can. We can certainly advocate for our students to the best of our ability.
Q: What do we tell our students?
We should assure students that this (winter) semester is safe – they’ll be able to complete it as expected, and student interests will be protected.
IX. RESEARCH GRANTS
Q: Do you know what is happening with our research grants and other funding? Were they spent with all the rest? Will the University have to honour them?
We don’t know at this time, but we will be seeking answers, and will pursue the university on this matter.
Q: Can we still pursue external grant funding, or does that require that the University be solvent?
This is unknown at the time, nor is it known whether faulty universities are now eligible for some grants under the conditions of various granting agencies. Our understanding is that members’ eligibility to grants has not be impacted but Laurentian University can no longer hold the grants.
Our hope is that the Monitor will assist in finding alternate solutions in order to minimize the impact on Faculty.
Q: If research funds have been misallocated, does that mean that the Tri-Council funders have legal recourse?
Yes, they would be considered creditors and have been served with the notice of motion.
This communication is a privileged and confidential communication between LUFA and its members for the purposes of LUFA reporting to its members as part of fulfilling its obligations to its members under the Labour Relations Act as their exclusive bargaining agent. This communication is not to be shared with any person who is not a member of LUFA without the express consent of LUFA’s President or Chief Steward.