The first thing to do was re-negotiate debt terms individually with each supplier. The AUS owed money for things such as office supplies, venue rentals and student reimbursements for AUS related expenditure, among many other things.
The amount totaled around $25,000 with the majority of it being owed to 3-4 suppliers. I had meetings separately with these suppliers and promised them that they would be paid back fully as soon as we received our student fees from McGill.
I provided them a timeline, with several scenarios on when we could expect to pay them back. The important thing here was to maintain a good future relationship with the suppliers while obtaining the concessions I felt were necessary to avoid bankruptcy. In hindsight, I was able to do a much better job than I though I would, as at the moment, I was powering through everything in ’emergency mode’.
Or maybe people were more understanding and sympathetic than I thought they would be. After continuous rounds of emails and meetings over two stress-filled weeks, I was able to delay our accounts payable sufficiently to be able to get us a shot at actually paying back our suppliers.
It was more a case of structuring and eroding away our debt in exactly the right way and making commitments to match with our projected cash inflows, then doing everything possible to ensure that the projected cash inflows turned into actual cash inflows.
Where the debt came from…
The second, and more complicated, part of the equation was getting the inflows of cash started again. The debt restructuring took place during the summer of 2012, when the only cash inflow we could expect was from the student fees held back by McGill for the previous year. The debt had built up because the AUS had continued to function as normal in the prior year, despite not having received the full student fees from McGill for that year.
The AUS had continued to function as normal because the previous AUS executive, in my opinion, were wary of projecting the image that AUS finances were in trouble. My perception of the preceding AUS exec’s reasoning is that they thought they were going through a very politically turbulent year because of the Quebec student strikes, and did not want to add anything else to the mix.
The Theft and its strategic implications
AUS finances that year were already dealing with a bad reputation, due to the theft of $12,000 from the office earlier in the year, and they did not want to publicly reveal any other negative information on AUS finances. Ideally, however, the AUS would have significantly scaled back its operations to deal with the shortage of incoming student fees.
Before I get into what needed to be done to get our frozen student fees from McGill released , I will need to recap a bit of AUS history. It’s important to understand why exactly McGill froze these funds in the first place.
And so on to the next post!