Co-op Atlantic has laid off about 400 employees and will be closing its four remaining grocery stores under its banner in Atlantic Canada.
"The workforce reductions are necessary as a result of the reduced level of operations going forward," as part of the ongoing restructuring, the company said in a statement on Thursday.
The layoffs will take effect "in the coming weeks," it said.
The jobs are tied to the food and gas sectors, which the Co-op announced in April it would be getting out of. The layoffs and store closures do not affect jobs at the 49 Co-op member stores across the region. Those stores employ 2,200 people and most of them now use Sobeys are their wholesaler.
The four corporately owned food stores that will be closed include:
- Mapleton Road Co-op (Moncton, N.B.)
- River Road Co-op (Grand Bay-Westfield, N.B.)
- Queen Street Co-op (Charlottetown, P.E.I.)
- Carol Wabush Co-op (Labrador City, N.L.)
"We have taken steps to inform our customers and employees of the closures and will complete the closures in an orderly manner," Co-op's interim chief executive officer Bryan Inglis said in a statement.
Workers were called to a meeting at Co-op Atlantic's headquarters in Moncton Thursday afternoon, where they learned the news.
They were seen taking boxes of personal items from the building.
"We deeply regret the loss of jobs and will continue to do everything we can to assist impacted employees," Inglis said.
The Co-op Group — Co-op Atlantic, Co-op Energy Ltd., and C A Realty Ltd. — also announced Thursday it has successfully obtained an order from the Court of Queen's Bench of New Brunswick initiating proceedings under the Companies' Creditors Arrangement Act (CCAA).
"The purpose of the CCAA proceedings is to provide the Co-op Group with the time and stability needed to continue operating while they pursue opportunities and solutions for the remaining businesses as part of the sale and restructuring process," it said in a statement.
In the meantime, the Co-op Group expects to continue operating and intends to continue to pay its suppliers for goods and services purchased and to pay employees for services rendered during the CCAA proceedings, it said.
The Co-op plans to focus on its agricultural, bulk fuel and housing businesses, according to the statement.
Last month, Co-op Atlantic store delegates voted in favour of selling the grocery and gas business to Sobeys.
The grocery stores in New Brunswick, Nova Scotia and P.E.I., will mostly become Foodland stores, while the gas stations will mostly be converted to Shell, Sobeys has said.
Co-op Atlantic has been exploring its options to address "persistent financial challenges" since last fall.
According to the statement, it has the full support of its senior lender, National Bank of Canada.
KPMG Inc. has been appointed by the court as the CCAA monitor.