Quest University will be safe from bankruptcy or receivership for the next few months and will have money to operate through spring.
On Jan. 27, in the Supreme Court of British Columbia in Vancouver, Quest was granted an extension of its financial protection and its $5-million loan was authorized.
This will keep the institution’s operations afloat and shield the school against bankruptcy or receivership until May 29, 2020. The university’s protection under the Companies' Creditors Arrangement Act, or CCAA, lasted until its reappearance in court today.
It was a development that had a positive reception from at least one school official.
“I’m relieved and encouraged and looking forward to next steps,” said George Iwama, president of the university.
More than 100 Quest students chose to attend the hearing, filling the area to the point where some in the crowd had to wait outside of Courtroom 54.
The judge even ordered that the jury seats and the docks, which are where the accused in criminals trials normally sit, be opened up to provide more seating for students in the audience.
“I promise I won’t send them to jail,” said Justice Shelley Fitzpatrick, drawing chuckles from the crowd.
Andrew Mark was one of those who chose to swap the classroom for the courtroom that day.
“I came to support my school. I just wanted the courtroom to be full. I wanted them to know how many people care about this institution….I came in solidarity,” said Mark.
“I think it’s worth defending mainly because it’s providing something no other school that I know of is providing.”
Fitzpatrick approved Quest University’s application and dismissed the arguments made by the Vanchorverve Foundation, which is the school’s biggest lender.
Fitzpatrick’s decision also allows the school to choose the $5-million loan of its choice, as opposed to the loan that the Vanchorverve Foundation wished the university to pursue.
The university will now be able to close an agreement with RCM Capital Management Ltd.
The Vanchorverve Foundation, the school’s biggest lender, wanted the courts to deny the RCM agreement.
In its place, the foundation wanted the university to obtain a $5-million loan from Burley Capital Inc.
As a condition of that loan, Vanchorverve had asked the court to replace four of Quest’s board members with appointees of its own choosing, something Quest had opposed.
“Clearly...an effort by [Blake] Bromley to take control of the board to serve what appears to be his own interests,” said John Sandrelli, Quest’s lawyer.
A monitor’s report to the court from PricewaterhouseCoopers notes that the Vanchorverve Foundation is managed by Bromley, who is the president of Benefic Group Inc.
Benefic’s website describes Bromley as “one of the world’s foremost experts in charity law.”
During the hearing, Sandrelli argued that the school should not agree to the Burley deal because it was not in the school’s interest.
On the other hand, Walker MacLeod, the lawyer for Vanchorverve, argued that Quest has been losing money for virtually all of its existence.
He said Vanchorverve has lost all confidence in Quest’s current board of governors.
MacLeod said that the board needs to be changed, otherwise the school would continue to spiral into debt.
“If you don’t change the governors, this isn’t going to get fixed,” he said.
Pricewaterhouse advised against the Burley deal in its report.
“The president of Burley is Shan Trouton, who is known to Quest and is known to be a business associate of [Blake] Bromley,” reads the monitor’s report.
“Given the significant history between Mr. Bromley and Quest that may require further investigation, it is the monitor’s view that the interim financing facility should be provided by a lender with no association with Mr. Bromley or Quest,” reads Pricewaterhouse’s report.
The accounting firm also noted that changing the board of governors of Quest, which is a condition of the Burley loan, would be “potentially crippling.”
Pricewaterhouse said in the report that it approved the university’s application given that the school has been acting in good faith and due diligence.
The accounting firm said significant progress has been made in just over a week.
The Pricewaterhouse report also said that. among other things, Quest has obtained a commitment for interim financing and has been working to identify an academic partner.
In the meantime, Quest’s students are rallying to support the institution.
Days before the hearing, Nate McCarthy and Dan Ellis of the Quest University Students’ Association told The Chief that students are working on letter-writing initiatives, video campaigns and symbolic donations, among other things.
They also said they were completely supportive of Quest’s current board of governors.
“We love our board. We love the people who sit on it. They’re funny. They talk to us like we’re humans. They talk to us like we’re peers,” said McCarthy.
“We would not want to exchange anyone on that board.”
McCarthy said that the school’s monetary situation did not come as a shock to him.
“One of the misconceptions about this process is that it’s disastrous. We’ve been aware of the financial situation of Quest since before we applied,” he said. “We knew that Quest had been going through the process of trying to get on its feet as a startup university.”