Herbal Magic shuts doors in Eastern Canada, sells off 41 centres
41 Western Canada centres stay open, but employees laid off without severance in rest of country
Weight loss chain Herbal Magic has closed all its locations in Central and Eastern Canada and put its operations there into bankruptcy.
It did not say how many were laid off, but an Ontario-based employee tweeted that everyone in the province had been let go without warning and without a severance.
Some customers who paid up front for weight loss programs may also lose money they paid to the firm.
It issued a statement Friday saying 41 Herbal Magic centres in B.C., Alberta, Saskatchewan and Manitoba would be taken over by a secured lender and continue operating. The name of the secured lender wasn't given.
But it warned that centres in some parts of Western Canada would also close. The company has about 150 locations across Canada, according to its website.
"It has become evident that Herbal Magic's national business model is not viable in today's changing weight-loss market and significant changes were required to our business," Philip Quirk, chief financial officer at Herbal Magic, said in a prepared statement.
The company's operations in Eastern Canada were put into bankruptcy under trustee Pricewaterhousecoopers Inc.
Customers scheduled to weigh in at its Ontario locations found them closed on Friday morning.
Some customers pay thousands of dollars in advance for the company's weight-loss program, which involves nutritional supplements and personal coaching from staff. One CBC reader claimed to have paid $4,000 up front.
The firm filed an intention to claim for creditor protection last year and Pricewaterhousecoopers was appointed as trustee. Eventually, it was sold to a private equity firm owned by Steve Hudson.
Hudson first invested in the company in 2009 through his Cameron Capital investment firm and was chair of Herbal Magic at the time of the proposal.
Herbal Magic shut locations in Prince Edward Island and St. John's in 2014.
The firm has built up millions of dollars in debt amid stiff competition in the weight-loss industry.
CBC Marketplace investigated some of the claims made by Herbal Magic about its nutritional supplements in a 2010 documentary.