Shock to the system
Feds, province optimistic potential buyer will reopen bankrupt call centre
the Sydney call centre will move ahead with a plan in the coming days.
The company suspended operations mid-afternoon Thursday after a last-ditch attempt to save the operation — owned by New Jersey-based JNET Communications — fell through Wednesday night.
The closure threw at least 600 employees out of work with just over two weeks to go before Christmas. ServiCom and JNET had previously filed for Chapter 11 bankruptcy protection in a Connecticut court on Oct. 19.
The company’s other call centre in Machesney Park, Illinois, closed down Thursday as well.
Politicians briefed on the mass layoff at ServiCom are confident an investor interested in buying
Two others in the state were shuttered on Sept. 29.
Cape Breton politicians at the federal and provincial levels met with former ServiCom site director Todd Riley and bureaucrats from the Atlantic Canada Opportunities Agency and Service Canada on Friday at the ACOA office in Sydney.
An American investor who was involved in the process to purchase the company over the past few weeks is still interested in taking over the Sydney call centre despite the deal falling apart earlier this week.
Business Minister Geoff MacLellan said he found it “very encouraging” the call centre may have a future but he cautioned the bankruptcy process has yet to fully unfold.
“It’s clearly connected to a court proceedings process in the U.S. around the dissemination of the assets and what happens with some of the funds that are in place from this particular entity,” he said following the meeting.
“There’s a lot of moving parts and logistics to manage around the re-establishment of this centre in Sydney but that is certainly looking promising at this point.”
He said the province will be “very creative” when it comes to offering a company employment incentives if the call centre reopens.
Like MacLellan, Sydney-Victoria MP Mark Eyking spoke with Riley and found out more details about the potential buyer of the call centre.
Eyking said he liked what he heard from Riley. There’s the possibility the federal government will work with an investor, providing loans if needed, to get the operation running again, the MP said.
“We’ll sit down with this new operator, of course. And maybe it’s new technology. We’d like them to come back to the same place. I think that’s doable from Mr. Riley’s perspective because it’s all there.”
Eyking said ACOA could also provide money for training upgrades for employees.
According to Riley, news on whether the investor wants to reopen the call centre could come as early as Monday or Tuesday.
ServiCom has made use of federal government loans and provincial payroll rebates in the past.
The call centre received federal government support in 2010 for capital upgrades and to expand its operations.
ACOA provided a $500,000 loan, while Enterprise Cape Breton Corp. also wrote a loan for $138,360. It was part of a total project cost of $1.2 million.
According to ServiCom’s Chapter 11 filing in October, the feds still have unsecured claims on two loans in the amounts of $43,292.68 and $12,659.02.
A Nova Scotia Business Inc. payroll rebate program ServiCom invested in wrapped up when it expired in 2012.
The call centre earned $366,594 from the rebate for creating 102 full-time equivalent positions under the terms of the agreement, NSBI spokeswoman Emily Neil said in a Nov. 2 email.
The company owed $205,893.91 in income taxes to the Canada Revenue Agency as of Oct. 19.
The employees are among the largest unsecured creditors listed in ServiCom’s bankruptcy filing. Some are missing at least three weeks’ pay plus bonuses, with little recourse to recover that money.
NDP labour critic Tammy Martin introduced a private members’ bill in the legislature this fall seeking wage theft protection for employees suddenly left without a job due to a company’s closure caused by bankruptcy.
A fund supported by the province would disperse money to help employees make ends meet.
“This is a crisis and when there’s a crisis the government needs to step in,” she said. “The government has a lot more resources to fight these matters in court than an individual making, you know, minimum wage, or if they’re lucky, $15 an hour.
“Most of these families don’t have the ability to fight these matters but the province does.”
As a private members’ bill, it has little chance of becoming law.
MacLellan said he’s not sure if it takes legislation by the provincial government to ensure companies pay employees what they’re owed.
“I think with private sector entities, most operate under a corporate social responsibility whereby they look after their employees. In this case, we certainly hope that money is there and expect that money to be there for the work that was rendered to this point.”
In the short-term, he said the priority is to provide support for laid-off employees, including fasttracking employment insurance benefit claims and options for retraining through provinciallyfunded programs.
Politicians and bureaucrats huddled Friday morning to discuss the sudden closure of ServiCom, Sydney’s only call centre, with the company’s former site director Todd Riley at the Atlantic Canada Opportunities Agency office in Sydney. The company shut down suddenly Thursday, throwing more than 600 people out of work after a deal to save ServiCom from bankruptcy fell through Wednesday night. From left are Business Minister Geoff MacLellan, Mines and Energy Minister Derek Mombourquette, Riley, ACOA director of enterprise development Joe Cashin, Sydney-Victoria MP Mark Eyking, Service Canada homeless partnering strategy representative Jim Clarke, Service Canada integrity services investigator Donnie MacIsaac, Cape Breton-Canso MP Rodger Cuzner’s executive assistant Kris Kolanko and ACOA director general of community development Tom Plumridge.