Business bankruptcies in Canada, which were up last year by the largest increase in 36 years, soared to a new record in the first quarter of 2024.
Bankruptcies are soaring, but especially in Canada | Financial Post | Pamela Heaven:
February 5, 2024 - "Business insolvencies in Canada jumped the most in 36 years of records in 2023, as debt costs rose and the economy weakened. The number of businesses that filed for insolvency was the highest in 13 years, according to figures out last week from the federal Office of the Superintendent of Bankruptcy.... The rise was mainly due to bankruptcies, rather than a renegotiation of terms, said Charles St-Arnaud, chief economist for Alberta Central. Bankruptcies were up 75.6 per cent year over year, mostly in accommodation and food services, retail and construction.
“'Businesses have been struggling to cope with a myriad of financial challenges over the past year, including higher input costs, wage costs, and debt servicing costs, exacerbating the rocky footing many have been on ever since the pandemic,' said André Bolduc, chair of the Canadian Association of Insolvency and Restructuring Professionals (CAIRP).... Business owners who were unable to pay back government pandemic loans known as CEBA by the Jan. 19 deadline now have to pay five per cent interest and make monthly payments on what was previously an interest-free loan with no monthly payments, CAIRP says."
Bankruptcies and insolvencies shot up in 2023 | CBC News: The National | February 2, 2024:
Business insolvencies in Canada surge at fastest level in 37 years, consumer debt soars | True North | Isaac Lamoureux:
May 6, 2024 - "Data released by the Office of the Superintendent of Bankruptcy on Friday shows that business insolvencies in Canada increased 87.2% between the first quarter of 2023 and 2024. The number of insolvencies between the two years increased from 1,070 to 2,003. Between the fourth quarter of 2023 and the first quarter of 2024, insolvencies increased from 1,521 to 2,003, a 31.7% increase.
"Consumers weren’t immune ... with consumer insolvencies increasing for the eighth consecutive quarter when measuring year-over-year increases, reaching the highest level since the fourth quarter of 2019. Insolvencies among consumers in Canada increased by 14% between the first quarter of 2023 and 2024. Consumer insolvencies increased from 29,725 to 33,885 between the two years. Between the fourth quarter of 2023 and the first quarter of 2024, insolvencies increased from 31,813 to 33,885, a 6.5% increase. On average, 372 Canadians filed for consumer insolvency daily in the first quarter of 2024.
“'A perfect storm of economic challenges is brewing, with high mortgage renewal rates, soaring rental prices, and elevated costs of everyday necessities. The high cost of servicing debts is also compounding the financial strain for many Canadians and leaving them grappling with insurmountable debt burdens,' said André Bolduc, Chair of the Canadian Association of Insolvency and Restructuring Professionals....
"Business insolvencies surging 87.2% was the largest annual increase in 37 years of records from the Office of the Superintendent of Bankruptcy, according to the CAIRP. 'We are seeing signs of a significant rise in distress among Canadian businesses. Many are still shouldering the burden of the pandemic, on top of high input and labour costs, declining consumer spending, and higher debt-carrying costs,' said Bolduc.
"The actual number of business closures is even higher, considering many business owners decide to cease operations without pursuing formal insolvency proceedings. Based on members surveyed by the Canadian Federation of Independent Business, only 10% of their members who considered closing their business would officially file for bankruptcy....
"The government’s decision not to extend the CEBA deadline was 'the straw that broke the camel’s back,' said Simon Gaudreault, chief economist and vice president of research at the CFIB. Gaudreault said that other factors contributing to businesses filing for bankruptcy included lost revenue from public health closures, supply chain challenges, inflation, increased costs, rising interest rates, and labour shortages.
"Statistics Canada’s most recent data shows that 43,121 businesses closed in January 2024."
Read more: https://tnc.news/2024/05/06/business-insolvencies-canada-surge-consumer-debt/
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