The federal government's labour standards division has launched an investigation into the bankruptcy that put about 170 employees at Hamilton-based CHCH-TV out of work last December, raising the possibility that company directors could be held liable for money owed to staff who were let go.
Former employees from the TV station, which reaches four million Ontario homes, received a letter from a labour standards inspector at Employment and Skills Development Canada (ESDC) confirming that the federal department is conducting an investigation under the Canada Labour Code.
The company that employed CHCH staff, Channel 11 LP, filed for bankruptcy on Dec. 11, 2015, along with a related numbered company, 2208937 Ontario Inc., putting the station's entire staff out of work. About 70 employees were offered new jobs under a new numbered company that was contracted by the station's parent, Channel Zero Inc., to provide news services. CHCH resumed news coverage with a much slimmer staff, but the 62-year-old station now produces only 17.5 hours of weekly local programming, down from 80 hours before the cuts.
Channel Zero is an independent media company that also operates specialty channels such as Rewind and Silver Screen Classics, and recently partnered with Bloomberg LP to launch a new business news network, Bloomberg TV Canada.
The financial woes at CHCH are a stark example of the harsh realities facing local news outlets across Canada. At the time of the bankruptcy, Channel Zero executives claimed CHCH had been losing $130,000 a week. Many full-time staff who were let go received at least $4,000 in salary and vacation pay owed to them, plus top-ups, and the union representing them, Unifor, gave each employee a $1,000 payment at Christmas. But they have yet to receive any severance pay.
Bankruptcy documents list more than $1.6-million owed to employees of Channel 11 LP, against less than $60,000 in assets.
The letter from labour inspector Sylvie Hilliard, dated March 3, 2016, and obtained by The Globe and Mail, says the department's investigation is about "wages and other amounts that may be owed" to former CHCH staff. Because of the bankruptcy filing, ESDC "is unable to take any actions ... to obtain unpaid wages from Channel 11 Limited Partnership."
But even if recovering those wages proves impossible, "the director(s) of the general partner, 2208937 Ontario Inc., may be found to be jointly and severally liable," the letter says. "Once the insolvency proceedings have concluded, the Labour Program will review potential director liability for any wages or amounts that remain outstanding."
Corporate filings list Channel Zero's chief executive officer Romen Podzyhun, president Cal Millar and vice-president Chris Fuoco among the 2208937 Ontario Ltd.'s officers.
Mr. Fuoco characterized the federal investigation as a formality. "They're going to find that any wages and vacation pay, etc., anything that directors would be liable for was paid out on December 11th," he said.
Such investigations are common, and Ms. Hilliard, the labour inspector at ESDC, cautioned that the federal investigation "may take considerable time to complete."
A spokesperson for ESDC confirmed the investigation, but declined to comment on its specifics, saying "whenever issues arise, we investigate fully."
Unifor has filed three separate applications with the Canada Industrial Relations Board (CIRB), alleging violations of the Canada Labour Code and seeking to designate 2492618 Ontario Inc., the new numbered company that employs the rehired CHCH staff – and which lists the same address as a company owned by Mr. Millar – as a successor to the bankrupt companies. A successor company could have responsibility for the bankrupt entities' obligations.
All three applications are "under investigation" by the CIRB, a spokesperson said.
With files from Stephanie Chambers.