Canada’s financially distressed Laurentian University has reached a separation agreement with one of its three affiliated campuses, while another is warning that the heavy-handed process threatens students and faculty nationwide.

Under the , the Christian-affiliated Huntington University will gain an independent status while transferring its gerontology programme to Laurentian.

The institutions are expecting “a smooth and cooperative transition”, Laurentian said in announcing the arrangement.

Tensions nevertheless remained high with another of Laurentian’s on-campus affiliates, Thorneloe University, which has been fighting Laurentian in court over its to end their federation agreement.

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The anxiety is driven by Laurentian’s use of the Companies’ Creditors Arrangement Act (CCAA), which gives financially troubled corporations powerful tools to save themselves through restructuring.

The rarely used law has never before been applied in higher education, where it gives the institution broad power to abrogate agreements protecting faculty and students, said Jen Johnson, a faculty senate member at Thorneloe.

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By deploying it, Dr Johnson said of Laurentian, “we’ve opened up the floodgates for other universities and colleges to be treated similarly, as though we were a private-sector corporation”.

“It’s disastrous,” said Dr Johnson, who teaches women’s, gender and sexuality studies at Thorneloe.

Laurentian, a 9,000-student institution that teaches in English and French, has been suffering from a variety of financial woes for at least a decade. Its leadership has repeatedly declined to answer questions about its handling of its federated partners, including estimates of how much money it expects the separations to produce.

In a statement announcing its termination of the federation relationships, Laurentian said the move offered “the best, and possibly the only, opportunity for the university to restructure its operations, enabling a financially sustainable future”.

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“We remain proud of these three federated institutions and the pivotal role they have played in our community’s history, whose traditions we will continue to celebrate at Laurentian,” it said.

Laurentian was created in 1960, with Thorneloe, Huntington and the University of Sudbury the three remaining institutions that joined in federation. Their partnering was part of a widespread strategy in Ontario and other parts of Canada to overcome restrictions on government funding that religiously affiliated campuses would face on their own.

The three affiliated campuses are located at the Laurentian campus in Sudbury, about four hours north of Toronto. There they teach their own students and provide some instruction for Laurentian students. A full third of the Faculty of Arts at Laurentian, Dr Johnson said, is at one of the three federated universities.

The danger for the rest of Canadian higher education posed by Laurentian’s use of the CCAA is not limited just to institutions with religious affiliations or federation partnerships, Dr Johnson said.

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Instead, she said, if not rejected by the courts, it would represent a major new method for universities to abruptly reduce their academic offerings without regard for collectively negotiated agreements or any number of other established protections for faculty and students.

Thorneloe said that its own financial advisers have concluded that ending the federation agreement between Laurentian and Thorneloe “would not have any material improvement on Laurentian’s financial situation”.

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“We will oppose this attempt by Laurentian to shut down Thorneloe as a scapegoat for Laurentian’s self-inflicted financial problems,” Thorneloe’s president, John Gibaut, said in announcing its legal challenge of Laurentian.

paul.basken@timeshighereducation.com