Hundreds of laid off Taiga workers waiting for severance pay 1 year later

Hundreds of former Taiga employees say they are still waiting for severance pay almost a year after being let go.

Some have told CTV News that they find themselves in a cycle of buck-passing and corporate loopholes while cheques remain unsent.

Between January and July of last year, the Quebec company that makes jet skis, snowmobiles and other motorized vehicles began laying off employees as it struggled to stay afloat.

On July 10, Taiga filed for bankruptcy.

Matthew Caputo was working in the service department when he was let go in July.

“It was a great, great time, and then suddenly in July, when things were already getting rocky with the company, and they laid off a bunch of workers, and we were all gone,” he said.

UK entrepreneur Stewart Wilkinson purchased Taiga in October, and Deloitte was appointed to oversee the bankruptcy, so employees turned to the federal government to receive their severance.

A court order in December ruled that the employees would be eligible for Canada’s Wage Earner Protection Program (WEPP) and entitled to around $8,000 in pay.

The WEPP provides support to employees who have lost their jobs due to a company declaring bankruptcy, entering receivership or being subject to another “WEPP-qualifying insolvency proceeding in Canada,” according to spokesperson Liana Brault.

Employment and Social Development Canada (HRSDC) said decisions are typically issued within 35 days.

“Submitting a complete application will help with timely processing. However, delays may occur in more complex cases,” said Brault.

In February, Caputo and the employees began applying, thinking they would get paid.

When no pay or update came their way as winter turned to spring, former employees began calling Service Canada to find out what was happening.

“They had no idea what was going on. They couldn’t give me any information,” said Caputo. “They said, ‘Hey, we’ll call you back. A specialist will call you back. Leave us your number,’ and so, I did that.”

No one ever called back, Caputo said.

The employees say they then tried to get answers from Deloitte to see if perhaps that company would handle the cheques.

When CTV News asked Deloitte to explain the situation, the response was curt.

“The company is bankrupt,” said Deloitte senior manager Jean-Philippe Leclerc. “There are no more directors and officers.”

Another employee had a similar story to Caputo, stating that he called Service Canada and Deloitte repeatedly but received mixed messages.

Eventually, Caputo was told the file was on hold.

On May 13, Deloitte confirmed that some employees had received “unfavourable responses” from Service Canada.

A decision letter obtained by CTV News stated that Taiga Motors Inc. was subject to a reverse vesting order in October, and, thus, employees no longer qualified for the WEPP.

“As a result, your former employer is no longer the subject of proceedings under the Companies Creditors Arrangement Act (CCAA) and eligible wages are no longer owed to you by them as they were transferred to another company,” the letter reads.

Taiga spokesperson Chloe Beaulieu explains that, as part of restructuring under the CCAA, “prior employee contracts that were terminated were designated as excluded contracts, and associated obligations as excluded liabilities.”

“As those employment contracts were not assumed by the purchaser as part of the transaction, there is no ongoing contractual relationship between the pre-restructuring employees and the new entity,” said Beaulieu.

Queen’s University investment analyst Nick Turco wrote a paper for the Insolvency Institute of Canada and explained in it that in a reverse vesting order, the debtor (in this case, Taiga) creates a new company and transfers liabilities, such as unwanted contracts.

The purchasing company then agrees to acquire the debtor company, excluding the subsidiary company, which includes all its liabilities.

“In acquiring the shares of the existing company, the purchaser becomes the new owner of the debtor’s business, and the debtor is released of any obligations associated with the liabilities that have been transferred,” Turco writes. “The existing company bought by the purchaser exits CCAA proceedings, and ResidualCo normally enters bankruptcy proceedings.”

HRSDC told CTV News it could not comment on the case.

“For confidentiality reasons, the Labour Program at Employment and Social Development Canada cannot comment on individual WEPP applications or disclose case-specific information,” said Brault.

Caputo said the majority of those who were laid off are young working people at a point in their professional careers where they want to move on from the whole experience, continue working, but also get what they’re owed.

“We’re trying to either start a business, we’re trying to either move out, we’re trying to do all these things,” he said. “So, when it’s taking months to get a large sum of money, that could really change the course of, I’m sure, a lot of people’s lives that need this money right now. It’s causing a lot of problems.”

Caputo says he has found other work, but is frustrated that the situation isn’t being resolved.

“The government’s kind of passing the buck. It almost seems like they’re saying, ‘We don’t want to pay. They (Deloitte) will,’” said Caputo. “Why are they putting it on hold instead of paying us? [...] If you had paid us and then went after them, then great, at least we can move on with our lives, and we can try to find something new, and then they can deal with the government and the company trying to hash out who owes who.”