Laurentian developed a ‘fake crisis’ to break ties with three schools in exchange for a $10 million loan, according to a lawyer.

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The University of Sudbury in Ontario maintains that it cannot exist without its federated partners.

Laurentian University’s efforts to sever relations with three federated schools in order to apply for a $10 million loan to help it continue restructuring for survival were met with vehement opposition in Ontario Superior Court on Thursday.

Laurentian lawyer D.J. Miller argued that without the loan, the Sudbury university would be unable to survive and that it would be forced to terminate contracts with Thorneloe University, the University of Sudbury, and Huntington University, as well as hold $7.7 million in grants and support that would have otherwise gone to those institutions.

Laurentian must break its ties with the three other universities, Miller told Justice Geoffrey Morawetz, in order to be eligible for a loan from Firm Capital Mortgage Fund Inc.

Laurentian “cannot put forward a realistic strategy unless it can avoid the flow of money from Laurentian to the federated universities,” she said.

The hearing is the latest step in the university’s continuing efforts to continue operating while pursuing financial stability through the Companies’ Creditors Arrangement Act’s insolvency process (CCAA). To step ahead with reform, the university requires the court’s approval.

The school began making drastic cuts to personnel and services earlier this month, eliciting outrage from students, staff, and supporters, as well as demands for governments to intervene. Following Laurentian’s announcement that breaking ties with the federated universities would be an important part of regaining financial viability, the federated universities filed court challenges.

Schools say the cost of cutting ties is exaggerated Thorneloe and the University of Sudbury, on the other hand, say there is no cost to Laurentian in maintaining ties with them, and that breaking the federated agreements will put Thorneloe in financial trouble.

Huntington has agreed to sell its online gerontology program to Laurentian University and to stop providing courses.

However, it was disclosed during Thursday’s court proceedings that if the other two universities win their legal challenges, Huntington would prosper as well and keep its federated status.

Thorneloe’s counsel, Andrew Hatnay, accused Laurentian of “pure mismanagement,” claiming that Laurentian can only keep $1.8 million from terminating its deal with Thorneloe alone.

Laurentian, Hatnay said, is taking advantage of the consolidation process by directing students away from Thorneloe and toward Laurentian to reduce competition.

Laurentian’s argument that it needs a loan fast, by April 30, is a “manufactured crisis,” he said, accusing Laurentian of using “tactics” to meet its financial objectives.