The CEO of Goodwill Industries of Toronto, Eastern, Central and Northern Ontario has resigned and the company says it is going bankrupt.
Keiko Nakamura, who announced her resignation in a statement, said efforts to restructure have been unsuccessful and she has concluded there is no viable option that allows the organization to re-emerge from the bankruptcy process.
Nakamura says a revival plan to reopen profitable stores, although feasible, cannot be achieved without significant financial investment and the lack of security for a loan is an untenable risk for potential investors.
Of the $6 million debt, approximately $4.2 million is owed to former employees in vacation entitlement and severance.
The trustee, Pollard & Associates Inc., has called a meeting with creditors for March 2.
Last month, the charitable organization announced it would close 16 stores, 10 donation centres and two offices due to cash flow problems, affecting more than 430 workers.
"This loss severely disrupts the lives of former staff, many of whom may experience difficulty in finding an equivalent replacement position," Nakamura said.
She said the community has lost a reliable way of disposing of goods that are no longer needed while at the same time supporting the community, while shoppers are left with fewer sources for reasonably priced goods.
The proposed restructuring plan would have required loans or investments of $2 million as an opening balance to assist in the payment of arrears and any reopening costs.
It would also have needed concessions from the unionized staff, including a reduction in hours, layoffs, labour efficiency improvements, and benefit costs.
Apart from staff, the other creditors include landlords of leased properties.