The interim CEO for the second-hand products store Goodwill in Danville said it has filed for bankruptcy with the hopes of being bought out by Goodwill organizations in two other areas.
“We’re hoping this facilitates a merger with the two other Goodwills so the Goodwill mission will be better able to serve Southside Virginia,” said Woody Van Valkenburgh, interim CEO and president at Goodwill industries of South Central Virginia, which is based in Danville.
Goodwill Industries of the Valleys in Roanoke and Goodwill Industries of Central and Coastal Virginia in Richmond would buy out Goodwill Industries of South Central Virginia, Van Valkenburgh said this week.
If the bankruptcy is approved and a buyout goes as planned, then the one Goodwill store in Danville and the two in Pittsylvania County will not close.
“We’re hoping that 95% of employees will be retained,” he said.
Administrative and managerial positions, Van Valkenburgh said, likely would be cut.
The organization filed for bankruptcy May 31 partly because a $2.3 million new retail store and transportation hub built in Blackstone in Nottoway County has not performed well, he said.
“It just hasn’t worked out,” Van Valkenburgh said, adding it’s unlikely the organization will be able to pay back the debt.
A decrease in population in the organization’s service area has played a role, leaving fewer households to make donations.
In addition, the organization owes about $678,064 in IRS penalties accumulated since 2015 for not providing health insurance to its employees, and about $500,438 to BB&T in Washington, D.C., to repay a loan that partially covered the $1.2 million renovation at Goodwill on Westover Drive, according to Chapter 11 documents.
“Trump did away with the individual mandate [under the Affordable Care Act], but not the employer mandate,” Van Valkenburgh said.
The organization also owes almost $10,000 to the city of Danville. The nature of the claim is listed as “trade debt” in the documents.
The bankruptcy documents list several thousand dollars of debt to other creditors.
Goodwill Industries of South Central Virginia has 130 employees among its locations on Westover Drive in Danville, at 4044 Franklin Turnpike in Tuscarora, and at 13701 U.S. 29, Suite B in Chatham. About 60 of those employees are at the Danville site.
Goodwill of South Central Virginia serves Danville and Pittsylvania County, as well the counties of Halifax, Charlotte, Prince Edward, Lunenburg, Mecklenburg, Amelia, Brunswick and Nottoway.
Andrea Butler, vice president of mission advancement with Goodwill Industries of Central and Coastal Virginia, confirmed the organization’s plans to buy out part of Goodwill of South Central Virginia.
“Our intent would be to acquire some of the assets,” Butler said Wednesday, adding her organization serves an area covering 39 cities and counties.
Goodwill Industries of Central and Coastal Virginia has 1,400 employees and 34 stores in its service area.
Bruce Phipps, CEO of Goodwill Industries of the Valleys, said they are hoping to buy part of the Goodwill organization headquartered in Danville.
“Our desire is to continue to keep the operations ongoing and have no interruption of business,” Phipps said Wednesday.
Goodwill Industries of the Valleys serves 31 counties with 36 stores and about 1,000 employees, Phipps said. Henry and Campbell counties, as well as Martinsville, are in its service area.
“We’ve got a strong presence in Southside,” Phipps said.
The merger will help out the current service area of Goodwill Industries of South Central Virginia, Van Valkenburgh said.
“They have more resources to collect more donations,” he said, referring to their higher populations.
Goodwill of South Central Virginia is a licensee of the Rockville, Maryland-based Goodwill Industries International, with the local organization licensed to use the Goodwill name, signs and logos.
Goodwill Industries International has more than 3,300 retail stores and outlets nationwide and an online auction site. It has 159 organizations in the United States and Canada with a presence in 12 other countries, according to the Goodwill Industries International website.
Each Goodwill also is assigned a geographic territory and must comply with membership standards and pay dues, Van Valkenburgh said.
Numerous factors are playing roles in consolidations among Goodwill organizations, Phipps said. There’s an increased focus on e-commerce and brick-and-mortar stores are not as strong, he said.
Also, less sizable Goodwill organizations face their own obstacles, he said.
“Smaller Goodwills have some challenges in meeting regulatory and compliance standards,” Phipps said, pointing to meeting government requirements for health insurance as an example.
Mergers or consolidations are driven by local Goodwill boards on a case-by-case basis, said Lauren Lawson-Zilai, spokeswoman for Goodwill Industries International.
The number of Goodwill organizations has decreased in the last decade, she noted, but more stores have opened.
“Often, consolidation results in operational and financial efficiencies, allowing local Goodwills to hire more people, open more stores and career centers, and expand mission services,” Lawson-Zilai wrote in an email Wednesday. “There are opportunities where it makes good business sense and creates even more opportunities for those we serve.”
In September 2018, Goodwill officials announced 14 local workers would lose their positions in Danville.
Then-CEO Gary Cotta said retail sales had not been enough to support two recent projects completed by Goodwill Industries of South Central Virginia — the roughly $1 million remodeling at the Westover location and the new store, warehouse and computer lab in Blackstone in Nottoway County.
Van Valkenburgh said the merger could take place by the end of August.
Crane reports for the Register & Bee. He can be reached at (434) 791-7987.