Collège LaSalle: the order the monitor would not endorse

The fall semester at Collège LaSalle was to have begun on August 27. It did not, and on September 2 the monitor told the Superior Court that the suspension was still in force and that the college had announced no date to start, per the Second Report to the Court, Sept. 2, 2026, paras. 10, 17. Some three thousand students were registered. The college was founded in Montreal in 1959, opened what its application calls Canada's first fashion school in 1973, was recognized by the Ministry of Education in 1981 as an institution of public interest, and today offers fifty-five programs in French and in English from a campus on Sainte-Catherine Ouest and a second in Laval, per the Application for an Initial Order, Aug. 21, 2026, paras. 2–3, 26–36. Its cash balance on August 20 was about $100,000, per the First Report of the Proposed Monitor, Aug. 23, 2026, para. 35(i).

On September 3, Justice Martin Castonguay signed an amended and restated initial order that does something a stay does not. It declares the college entitled to receive the full amount of the subsidies provided for under its 2026-2027 initial allocation "sans aucune retenue, déduction, ou autre forme de compensation de la part du gouvernement du Québec, y compris le ministère de l'Enseignement supérieur" [translation: "without any withholding, deduction, or other form of set-off by the Government of Quebec, including the Ministère de l'Enseignement supérieur"], and it orders the government to pay, per the Amended and Restated Initial Order, Sept. 3, 2026, paras. 4–5. The stay was extended to September 24, and the order is executory notwithstanding appeal, per the Amended and Restated Initial Order, Sept. 3, 2026, paras. 3, 6. The allocation the province had set for the year, and confirmed to the college, is $31.8 million, per the Second Report to the Court, Sept. 2, 2026, para. 37.

How a college comes to owe its ministry forty-seven million dollars

Quebec funds its colleges in two motions. Before the school year, the Ministère de l'Enseignement supérieur fixes an initial allocation based on prior years' total enrolment, eligible activity estimates and funding formulas. After it, once actual registrations and program eligibility are validated, the ministry revises the figure to what the institution was actually entitled to. Because the initial allocation does not distinguish local from international students, and student populations move, the application observes that the two numbers routinely differ — "toutefois, ces ajustements entraînent rarement des fluctuations de l'ordre de dizaines de millions de dollars" [translation: "however, these adjustments rarely produce fluctuations on the order of tens of millions of dollars"], per the Application for an Initial Order, Aug. 21, 2026, paras. 45–47.

Two of them did here, and both trace to the same statute. Bill 96, adopted June 1, 2022 as the Act respecting French, the official and common language of Québec, amended the Charter of the French language to cap the number of full-time students who could enrol in English-language college programs beginning in 2023-2024. The application's complaint is not the cap but its commencement: the legislation contained no grandfathering for existing cohorts, so a subsidized private college could not comply gradually, per the Application for an Initial Order, Aug. 21, 2026, paras. 48–50.

By decisions of June 28, 2024 and June 30, 2025, the ministry found that the college had exceeded the caps on its AEC programs by 716 students in 2023-2024 and by 1,066 students in 2024-2025, and imposed penalties of $8,781,740 and $21,113,864 — about $29.9 million together, per the Application for an Initial Order, Aug. 21, 2026, para. 51. The college is contesting both decisions by judicial review in court file 500-17-130879-243. In the meantime, under an agreement with the ministry made without prejudice or admission, $195,000 comes off each of the nine subsidy instalments paid each year; $3,317,550 had been withheld that way by the date of the application, per the Application for an Initial Order, Aug. 21, 2026, para. 52.

The second number came from the ordinary mechanism working on extraordinary facts. For 2025-2026 the initial allocation was $29,189,338. The revised allocation was $11,879,882. Enrolment in the AEC programs had fallen from roughly 3,153 students in 2023-2024 to 1,491 in 2025-2026, and some subsidies paid for international students were recovered on eligibility review, per the Application for an Initial Order, Aug. 21, 2026, paras. 54–55. The application puts the resulting overpayment at approximately $17 million; the monitor's second report puts it at approximately $17.9 million, per the Application for an Initial Order, Aug. 21, 2026, para. 56 and the Second Report to the Court, Sept. 2, 2026, para. 38. The list of known creditors filed with the initial order resolves the two claims into one line: Ministère de l'Enseignement supérieur, $47,205,060, against a total creditor list of $57,155,494, per the List of Creditors, Aug. 24, 2026.

Total enrolment fell from 4,700 in the fall of 2024 to 3,425 in the fall of 2025, a drop the application attributes largely to Bill 96 and, additionally, to the federal caps on international study permits introduced in January 2024, per the Application for an Initial Order, Aug. 21, 2026, paras. 6, 68, 71. The monitor's balance sheet as at June 30, 2026 shows assets of $29.457 million against liabilities of $50.513 million — net assets of negative $21.056 million, where a year earlier the deficiency was $4.545 million, per the First Report of the Proposed Monitor, Aug. 23, 2026, paras. 37–38. "Consequently, the Proposed Monitor is of the view that LaSalle College is insolvent," the first report concludes, in its own English, per the First Report of the Proposed Monitor, Aug. 23, 2026, para. 54.

A debtor with no secured debt, inside a group that has plenty

The college itself carries no secured debt, and it is neither borrower nor guarantor under the credit agreements of the wider LCI Éducation group — a network of eleven institutions on several continents, of which this college is the only CCAA debtor, per the First Report of the Proposed Monitor, Aug. 23, 2026, paras. 27, 37 and the Application for an Initial Order, Aug. 21, 2026, paras. 10–11. What the college does have is possession: it occupies, as emphyteutic tenant, the principal asset pledged to the group's bank syndicate of RBC as administrative agent, BMO and CIBC, alongside CDP Investissements inc. and Export Development Canada.

That structure explains a choice of officer that would otherwise raise an eyebrow. Restructuration Deloitte inc. was retained on February 24, 2026 by RBC, as agent for the syndicate, as financial advisor to review the LCI group; the debtor asked that the same firm be appointed monitor, "dans un esprit de collaboration et de transparence" [translation: "in a spirit of collaboration and transparency"]. Deloitte disclosed that it will continue as the lenders' financial advisor while serving as monitor, and retained Blake, Cassels & Graydon as independent counsel for the CCAA proceeding, per the Application for an Initial Order, Aug. 21, 2026, para. 12 and the First Report of the Proposed Monitor, Aug. 23, 2026, paras. 13–17, 84.

The initial order of August 24 stayed proceedings until 11:59 p.m. on September 3, suspended the Crown's rights on the terms of s. 11.09 of the CCAA, and granted two charges: an administration charge of $500,000 for counsel, the monitor, its counsel, the financial advisor Raymond Chabot Grant Thornton and the communications adviser, and an intercompany advances charge of $2.3 million securing advances the LCI group may make to the college with the bank syndicate's written consent. Exhibits R-6 and R-7 — the group's confidential restructuring plan of June 22, 2026 and its August 10 update — were sealed, per the Initial Order, Aug. 24, 2026, paras. 15–16, 42–44, 55. A directors' and officers' charge of $500,000 was sought in the application and recommended by the monitor's first report; the order as granted contains none, per the Application for an Initial Order, Aug. 21, 2026, paras. 100–104 and the First Report of the Proposed Monitor, Aug. 23, 2026, paras. 75–82.

Ten days of talks

From August 26, at the college's express request, the monitor and Raymond Chabot Grant Thornton met representatives of the Ministère de l'Enseignement supérieur and the Ministère de la Justice. Financial documentation went across, covering the college's position, its restructuring plan and three years of projections. Notices to creditors ran in La Presse+ and The Globe and Mail on September 1, with a second publication set for September 8. Employees were notified on August 27, creditors by mail on August 28, and students holding deposits by email the same day, per the Second Report to the Court, Sept. 2, 2026, paras. 8–9, 12–16, 20.

Nothing was agreed. "Malgré les nombreux échanges, aucune entente acceptable pour les parties n'a été conclue en date de ce Deuxième rapport," the monitor wrote — no agreement acceptable to the parties had been reached, leaving the college in a financial impasse, without the liquidity to meet its short- and medium-term obligations and unable to start the semester. The college had warned the monitor that absent a very short-term solution arising from an agreement with the ministry, its operations would be definitively compromised and it would have to seriously consider an assignment in bankruptcy, per the Second Report to the Court, Sept. 2, 2026, paras. 10–11. Employees continued to be paid in the ordinary course throughout, per the Second Report to the Court, Sept. 2, 2026, para. 19.

The reservation

The monitor's cash flow projection assumes the college starts the semester and receives the initial allocation monthly with no set-off for prior-year recoveries or penalties. On that assumption there is enough money to September 24. The report then sets out, in four paragraphs, why the assumption is the problem.

The 2026-2027 initial allocation rests mainly on earlier years' enrolment, and so remains subject to the same year-end revision that produced the 2025-2026 clawback. If registrations in 2026-2027 resemble 2025-2026's, the college ends the year owing the ministry a substantial repayment on the mechanism that has already run once. The monitor does not treat this as hypothetical: the initial allocation for 2026-2027 is "significativement supérieure à l'allocation révisée à être déterminée en fin d'année" [translation: "significantly higher than the revised allocation to be determined at year-end"], and paying it monthly through the year "il en résulterait à la fin d'année une dette additionnelle de plusieurs millions" [translation: "would result at year-end in an additional debt of several million"] that the college's operations as forecast would not permit it to repay, per the Second Report to the Court, Sept. 2, 2026, paras. 36–39. In that scenario, the report adds, the ministry "se retrouverait davantage exposé sur le plan financier sans possibilité de remboursement" [translation: "would find itself further exposed financially with no possibility of repayment"], per the Second Report to the Court, Sept. 2, 2026, para. 47.

The monitor found the relief sought generally reasonable, appropriate and adapted to the circumstances, and the debtor to be acting in good faith and with diligence. On the subsidy conclusions specifically, it wrote that they create a new financial obligation to the ministry the college has not shown it can repay absent additional fundraising from donations; that without the subsidies it is highly probable the college will have to cease educational operations very shortly, harming its employees and its students; and that it was therefore "pas en mesure de se positionner sur le caractère opportun de ces conclusions spécifiques et laisse au Tribunal le soin de statuer à cet effet" [translation: "not in a position to take a position on the appropriateness of these specific conclusions, and leaves it to the Court to rule on the matter"], per the Second Report to the Court, Sept. 2, 2026, para. 48. Its recommendation to grant the application was expressly made subject to those reservations, per the Second Report to the Court, Sept. 2, 2026, para. 50.

The order signed the next day is two pages long and gives no reasons. It grants the application, extends the stay to September 24, declares the entitlement, orders the government to pay, directs provisional execution notwithstanding appeal, and awards no costs. The only counsel named on it are the debtor's, per the Amended and Restated Initial Order, Sept. 3, 2026.

One further condition sits outside the courtroom. Staff and corporate services essential to the college's operations are supplied by other LCI entities, and the monitor records that even with the amended order the group must reach its own agreement with its secured lenders, "sans une telle entente, les opérations de la Débitrice ne pourront se poursuivre" [translation: "without such an agreement, the Debtor's operations cannot continue"], per the Second Report to the Court, Sept. 2, 2026, para. 46. That negotiation is the one behind the sealed exhibits. The stay runs to September 24.