SYDNEY, N.S. -- The Cape Breton University students' union met with a bankruptcy lawyer this week to consider its options after a court ruling that the group owes hundreds of thousands of dollars to a national student advocacy organization.

The union has been ordered to pay the Canadian Federation of Students almost $300,000 in damages after an Ontario Superior Court justice ruled an attempt to leave the national organization in 2008 was flawed.

"It's been incredibly difficult," said CBU students' union president Brandon Ellis.

"We've seen money that should have gone to events, and frosh weeks, and just providing better student life for students on campus, it's gone to legal bills. And that's not what it's meant for."

Ellis said the union tried to defederate when it felt it wasn't benefiting from membership in the national organization.

The students' union held a referendum and 92 per cent of CBU students voted to leave the CFS. At that point, Ellis said, the union felt it was no longer a member and stopped paying membership fees.

However, the CFS maintained the students' union didn't properly follow the defederation process, and launched the now seven-year-old legal dispute.

"There are democratically set out processes in our bylaws to either leave or join the federation, and student unions need to be aware of these," said CFS national chairperson Bilan Arte in an interview. "I think that unfortunately in this case the (CBU) students' union did not follow these bylaws."

This month's court decision requires the students' union to pay the federation membership fees for the last six years as well as the federation's legal fees, which Ellis estimates could be another $100,000.

With an annual budget of only $500,000, Ellis said the viability of the students' union -- responsible for services such as the health and dental plan and emergency bursary fund -- is severely threatened.

"We're seriously looking at bankruptcy, which could mean the loss of 80 jobs here at the student's union," he said.

Ellis said it's a disheartening prospect after years of trying to reach a resolution with the CFS.

"It's really hampered student life. It's hampered our ability to advocate for students, and it's hampered our ability to build a community here at CBU for students," he said.

"And it's ironic, because that's what the Canadian Federation of Students' mission statement, their goal, is all about. Building community on campuses."

Arte said bankruptcy isn't the only option. She said the CFS would be willing to take payments from the students' union in instalments.

"It is not the federation's interest to put the Cape Breton University student's union in any sort of precarious financial situation," she said.

"From our perspective, we're very optimistic and hopeful that we can have constructive conversations on how we work together."

Kyle Power, the executive director of Students Nova Scotia, said he is concerned for the future of the students' union, which is a member of the provincial student organization.

"Lawsuits against student unions by the Canadian Federation of Students are not uncommon. But I don't know of a judgement of this magnitude against a union so small," he said.

"I think we're in uncharted territory as a student movement, when we're seeing a student union go bankrupt out of a court judgement."

According to court records, the CFS has been involved in legal disputes in the last five years with multiple groups trying to leave the organization, including student societies at Kwantlen University College, Simon Fraser University, McGill, the University of Victoria and the University of Guelph.

"I don't believe that the process that is laid out (to leave the federation) is not fair," said Arte.

"The interest that the Canadian Federation of Students has in being in a litigious position is not a founded one ... And so it is unfortunate that we find ourselves in this situation today."

The CBU students' union has two weeks to make a decision regarding bankruptcy or a court appeal.