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Since our last post, BUSINESS RESTRUCTURING PROPOSAL: REASONS WHY GOODWILL TORONTO IS NOT ALWAYS ENOUGH, people have asked me: is Goodwill a non profit organization? The answer is yes.
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The Goodwill Toronto bankruptcy has confused and astonished many people. After all, how can Goodwill, a non profit organization, go bankrupt? Isn’t the very nature of a non-profit or not-for-profit that it doesn’t have to make a profit? Yes, but by the same token, it also should not sustain losses either. At our Firm, we each volunteer at a different non-profit whose cause we believe in. The non-profit’s annual budget is not supposed to sustain a loss, but in carrying out the aims of the organization, it also does not have to make an operating profit unless of course the non-profit is trying to amass funds to designate for a specific purpose.
Unfortunately to the amazement and dismay of many, Goodwill Industries of Toronto, Eastern, Central and Northern Ontario has filed for bankruptcy, three weeks after abruptly closing its doors. It has over $6 million in debt with approximately $4.2 million owed to former employees in vacation entitlement and severance. This resulted in the closure of 16 Goodwill stores, 10 donation centres and two offices, affecting more than 430 workers. Is Goodwill a non profit organization? Apparently so!
Leaving the employee vacation pay and severance liability issue aside, I would suggest that the balance of the debt, as noted below almost $2 million, represents losses suffered from prior periods. Somewhat tongue in cheek, the other answer to the question, is Goodwill a non profit, is, YOU BET!
Is Goodwill a non profit organization? YES!
Now, more information is known, so, we want to provide you with an update on the Goodwill situation, mainly from the Goodwill Toronto bankruptcy filing documents.
Goodwill’s Creditors:
- Number of unsecured creditors: 711
- Amount owing: $6 million
- Number of creditors not former staffers: 158 or 22%
- Total owing unsecured creditors not former staffers: $1.7 million or 28%
Main Unsecured Creditors:
- Anita’s Driving Academy: $2,080
- Blueprint Hair Studio: $840
- Brown’s Fine Foods (owns Goodway in Kingston): $7,586.09
- City of Mississauga parking control: $41.00
- Dr. Eric Domingo (provides general and cosmetic dentistry): $3,571.08
- Dr. Nosenet Bollo-Kamara (provides family and cosmetic dentistry) $2,999.05
- Dr. Robert Lubin (family and cosmetic dental care): $7,143.72
- Ducati Shoes: $1,372.00
- Goodwill Industries Intl: $16,827.29
- Adore (dress shop): $1,397
- Larj Consulting Inc. (Former TCHC CFO Len Koreonos): $19,930.38
- Ministry of Community and Social Services: $150,000
- Region of Peel: $34,547.30
- Royal Bank Visa: $12,371.95; $1,423.83; $2,746.13; $39,413.32; $998.06; $224.87; $2,035.84
- Samarqand Food & Bakery: $23,894.45
- Tru It Solutions (IT firm formed by former TCHC employees): $29,680
Restructuring is a bankruptcy alternative, you just have to be able to continue carrying on business!
After its closure, Goodwill Toronto wished to enter into a restructuring, but the proposed restructuring plan would have required millions of dollars of investment for an opening balance to assist in the payment of arrears and any reopening costs. And it would also have needed concessions from the unionized staff, including a reduction in hours, layoffs, labour efficiency improvements, and benefit costs. In the end all attempts at restructuring failed and the CEO, Ms. Keiko Nakamura, resigned. As we said in our earlier vlog: “it takes money to have a successful business restructuring proposal”.
How could a not-for-profit go bankrupt?
The reality is that not-for-profits are not immune from financial problems and insolvency. Not-for-profits can suffer from the same financial problems that plague their for-profit cousins and they too can seek protection under the Bankruptcy and Insolvency Act (Canada), also known as the BIA. No individual or company is immune from financial problems. And sometimes bankruptcy is the solution.
What should I do if my company or organization is in financial trouble?
However, there are usually options and alternatives to explore before declaring bankruptcy. If you’re suffering from serious financial problems and/or are insolvent, contact Ira Smith Trustee & Receiver Inc. for a consultation. You may have what seems like insurmountable problems, but we do have the answers.
If your company or organization is trapped with too much debt, you need a professional trustee to help you manage the situation and create a viable business restructuring proposal (either under the BIA or the Companies’ Creditors Arrangement Act –CCAA) before it reaches a critical stage where bankruptcy is your only option. We have been able to help many companies carry out a successful business restructuring proposal.
Successful completion of such a program, will free you from the burden of your company’s financial challenges to go on to be a productive, profitable employer allowing management to focus on business growth and not be plagued by debt problems.
Contact us today so that you can put your financial problems behind you Starting Over, Starting Now.
So, is Goodwill a non profit organization? Not any more in Toronto!
