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Goodwill Cuts Ties With Toronto Affiliate

By Andy Segedin - February 9, 2016

Goodwill Industries of Toronto, Eastern, Central and Northern Ontario (TECNO) has been disaffiliated from membership in Goodwill Industries International (GII) in Rockville, Md. The decision, made by GII’s board of directors, came less than three weeks after the resignation of the organization’s board and the shut down of services including 16 stores, 10 donation centers. Approximately 430 employees lost their jobs in the move.

Keiko Nakamura, CEO of the now former Goodwill TECNO, has since stated on the organization’s website that the organization has filed for protection under Canada’s Bankruptcy and Insolvency Act and intends to restructure. The organization is considering making a future proposal that would annul the bankruptcy and reopen some stores and continue services, according to the post.

GII was informed of the resignation of Goodwill TECNO’s board the evening it occurred. International leaders learned of the bankruptcy filing through the media, according to Lauren Lawson-Zilai, GII’s national spokesperson. GII provided the former affiliate with consultative services in recent years, but was no longer able to provide assistance following the board’s resignation and ceasing of operations.

“The acts of the shuttering of 16 stores, 10 donations centers and job training services, and the resignation of the board of directors, were acts found egregious by the GII Board of Directors,” Lawson-Zilai said in an email.

The former Goodwill TECNO, as part of the disaffiliation, may no longer represent itself as a member of GII, which is comprised of 164 independent, autonomous organizations across North America. Additionally, Goodwill’s name, logo and trademarks may not be used.

The Canadian Airport Workers Union (CAWU), which represents the majority of the former affiliate’s workers, is reportedly in favor of the proposal to reopen, according to Nakamura’s statement. A CAWU employee clarified that the union would be in favor of any proposal that would reopen stores. Denis Ellickson, CAWU’s counsel, was not immediately available for comment.

A statement by Nakamura first announced the closing of operations on Jan. 17. Cash flow issues and factors negatively impacting the retail environment were cited as reason for shutting down shops, centers and offices. About 85 percent of the former Goodwill TECNO’s revenue was tied into retail. In 2014, Goodwill TECNO reported revenues of $28 million and expense of $29.2 million.

In the days immediately following the announcement, it was unclear whether the former affiliate’s employees would receive their pay due through Jan. 16. On, Jan. 22, Nakamura confirmed that former employees would be paid. CAWU has been quoted in other outlets that employees are still owed as much as $4 million in termination and severance. Nakamura did not respond to an interview request prior to publishing.

The former affiliate’s struggles are “extreme and unusual,” according to Lawson-Zilai. Four other autonomous Goodwill organizations are currently operating successfully in Ontario. Affiliates are also operating in Edmonton and Montreal.

GII does not know the number of program participants who were served by the former affiliate. A technical support and transition team is being created to assess the needs of the community previously served by the former Goodwill TECNO and to strategize a service path moving forward.

“GII’s transition team, comprised of folks on the ground in Canada and across the U.S., will be able to assess the needs of the community so it can thrive moving forward,” Lawson-Zilai said.

An employee hotline has been set up for transitioning employees, reachable at 905-883-8715. GII leadership understands that employees have received final paychecks, but is not aware of how much might be owed to them, Lawson-Zilai said.

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