Wednesday, February 10, 2016
Goodwill Toronto Has $6-million In Liabilities After Declaring Bankruptcy
The charity’s assets total just a bit more than the $700,000 Goodwill paid in rent each month for its network of 16 thrift stores and 10 donation centres, which were abruptly shut down on Jan. 16. Among its listed assets is an estimated $250,000 for Goodwill’s remaining “used clothing, house wares and other donation items.”
Various landlords are owed tens of thousands, according to the bankruptcy filing. Among Goodwill’s largest unsecured creditors is Waste Management Inc., which the charity owes $75,784.80 for carting away donations unfit to sell.
On its face, the numbers make even more daunting chief executive officer Keiko Nakamura’s plan to try to negotiate concessions with the charity’s unionized staff, landlords and other creditors in the hopes of emerging from bankruptcy and reviving the struggling charity.
Last week, Goodwill’s U.S.-based umbrella organization showed its displeasure with the sudden shutdown by severing its ties with the Toronto chapter, meaning the local outfit cannot use the Goodwill name after the bankruptcy proceedings are done. According to the bankruptcy filing, the umbrella group, Goodwill Industries International of Rockville, Md., is owed $16,827.29, in membership dues.
Last month, the entire board of Goodwill’s Toronto-based chapter resigned. All of its stores were shut down over a weekend without warning. The move immediately tossed its staff of 430 – many drawn from the ranks of the chronically unemployed, the disabled and new immigrants, and living paycheque to paycheque – out of work. Ms. Nakamura later blamed a “cash-flow crisis.”
On Monday, Goodwill Industries of Toronto, Eastern, Central and Northern Ontario voluntarily filed for bankruptcy, handing over control of the organization’s assets to a bankruptcy trustee.
In a statement, Ms. Nakamura said she hoped to preserve assets to pay off employees, who are still owed severance and termination pay. But she also said she hoped to present employees and other creditors with a proposal on the concessions needed to allow Goodwill to reopen at least some stores.
Ms. Nakamura said it is too early to say what a revived Goodwill could look like. But she said it would likely have fewer stores and fewer staff working fewer hours with more flexible working conditions. It would also involve persuading Goodwill’s biggest creditors, its landlords, to give the organization a break. Some have already terminated leases.
“I do see hope. I see a future for this organization, albeit it may be a different name in future, but I do see great hope for this company,” Ms. Nakamura said.
The union representing most of Goodwill’s workers, the Canadian Airport Workers Union, says $4-million is still owed in severance and termination pay, a large chunk of the $6-million in liabilities Goodwill lists in its bankruptcy filing. But the union has committed to talks on concessions.
Asked how the charity was allowed to collapse so quickly last month, with so much disruption to staff, Ms. Nakamura said Goodwill had hoped sales would be strong enough over the holidays and after Christmas to scrape by.
Goodwill had tried to renegotiate terms for a number of long-term leases in the fall, but had largely failed, she said. Sales then sunk more than anticipated. And Goodwill’s union had rejected her efforts to reduce hours during the slowest winter months, she said.
At a meeting before the board resigned, she said was surprised at the board’s decision to quit and leave her instructions to shut Goodwill down to ensure it could meet its payroll before it ran out of cash.
“My advice was not to shutter the place,” she said. “Their main issue was to ensure that we could pay the wages. I was surprised and quite disappointed. … I appreciate the decision that they needed to make.”
Please share this