Rene Johnston / Toronto Star
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Toronto Goodwill has shut down and declared bankruptcy.
Goodwill Industries of Toronto, Eastern,
Central and Northern Ontario has filed for bankruptcy and lost its right
to use the Goodwill name, three weeks after abruptly closing its doors.
The news came in two separate announcements
Monday. In one, posted on the charity’s website, CEO Keiko Nakamura
announced the company had filed for bankruptcy and hopes to restructure.
“We’re considering elements to the number of
stores that would reopen … this give us a great opportunity to really
look at the real estate that we are in,” Nakamura told the Star.
Goodwill TECNO abruptly closed all 16 of its
stores, 10 donation centres and two offices on Jan. 17, throwing more
than 400 people out of work. The entire board of directors had resigned
two days before.
Nakamura said the company was challenged by a low-profit market that had to compete with other retail businesses.
“We do have seasonal variation with our
business, and we were very much hit in the winter when our sales
drastically dropped,” she said.
“Our operation has always been a low-margin business, but it does impact cash flow,” she said.
David Soberman, a professor of marketing
management at the University of Toronto, said being a low-margin
business doesn’t explain all of Goodwill’s problems.
“Walmart and Costco are extremely low-margin
businesses, too … It’s the type of business where, if you run a tight
ship, you can be fine,” Soberman said.
Bob Klotz, a lawyer with Klotz Associates,
said a bankruptcy filing like the one Goodwill Toronto is going through
will leave money for employees, but not everything will be paid. Unpaid
wages and vacation pay are priorities in cases like this, he said, but
severance pay will be much harder for the employees to get.
“It’s quite unpleasant,” he said.
Denis Ellickson, a lawyer with the Canadian
Airport Workers Union, which represents the workers, said the employees
will see some money, but most likely not everything they’re owed, unless
Goodwill Toronto completely emerges from bankruptcy.
“Nobody will be seeing 100 cents on the dollar,” he said.
Nakamura said she didn’t have information on
what kind of money the employees will see, but said the payment of
employees is one of her priorities.
The other announcement came from Goodwill International,
which controls the Goodwill brand and licenses local Goodwill charities
like Toronto’s. In their release, the parent company announced it had
revoked membership for Goodwill Toronto after reviewing the closure,
which it called an “egregious act.”
Goodwill Toronto will no longer be able to use the “Goodwill name, trademarks and logos,” the announcement said.
Nakamura said she’s still looking at “all the
implications” of the disassociation, and said Goodwill International
indicated the charity could reapply for membership.
“I do think that our services are still very
relevant to the communities … whether it’s under the brand of Goodwill
or under a future brand name,” she said.
Ellickson said the union was disappointed with Goodwill International’s decision to disaffiliate the Toronto charity.
“It has, we believe, compelled Goodwill to the bankruptcy process,” Ellickson said.
“Without the Goodwill name and brand, it’s
going to be very challenging for those individuals who want to see
Goodwill or something like Goodwill reopened.”
Soberman said restructuring will be hard for Goodwill Toronto if it has to do it under another name.
“It doesn’t mean that … over the course of
several months or years you couldn’t develop another brand … but you’re
competing with people like the Salvation Army, Value Village,” he said.
“You’re going to be at a disadvantage if people don’t know what you are.”
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