Canadian business insolvencies were up 36.9% year-over-year for the second quarter, reaching 1,090 filings — the highest quarterly volume since 2014. .“Higher borrowing costs are one of the biggest contributors to distress,” said Canadian Association of Insolvency and Restructuring Professionals (CAIRP) Chair Jean-Daniel Breton in a Thursday press release. .“Canadian companies may be either in need of more credit or are now faced with higher capital costs on heavy debt loads.” .Breton said higher interest rates have hurt consumer demand. .According to CAIRP, the financial burden of high interest rates has increased the stress on businesses and the significant increase in insolvencies means more of them are under pressure of weakening economic growth, high interest rates, and inflation..Many small business owners overlook bankruptcy options versus walking away from insolvency, said Breton. .Rather than opt to shut down their businesses and abandon them, he said those facing insolvency should consider seeking professional guidance about potential debt relief solutions to restructure or wind down their operations..Licensed insolvency trustees are the sole professionals authorized to administer government-regulated insolvency options. .“Seeking their expertise can provide valuable insights and assistance in navigating the available avenues for debt resolution,” said Breton. .While the exact consequences of business insolvency depend on several factors, CAIRP said but it is possible to preserve it through restructuring or corporate workouts..Through a comprehensive review of the operations and finances of the business, it said licensed insolvency trustees use their extensive specialized training and knowledge of governing legislation to guide them through financial hardship..Business insolvencies for the one-year period ended in June, increasing by 37.8% compared with the same period last year. Accommodation and food services, retail trade, manufacturing. and construction registered the largest increases. .CAIRP continued by saying Canadian consumer insolvencies reached 23.5% in the second quarter of 2023 compared to the same one last year, heading on an upward trend toward pre-pandemic levels..An average of 343 people filed for consumer insolvency each day in the second quarter of 2023, leading to a cumulative count of 31,244. .“Consumer insolvencies in Canada are steadily rising, reaching levels comparable to those observed before the pandemic,” said CAIRP Vice Chair Andre Bolduc. .“The upward trend is attributed to escalating debt-carrying costs and inflation, with the potential for consumer insolvencies to surpass pre-pandemic averages later this year.”.Bolduc said mounting debt and rising interest rates might “push more individuals to consider insolvency as a viable option, given the increasingly challenging task of managing their debt obligations in the current higher rate environment.”.Debt challenges contributing to insolvency arise from a combination of financial setbacks. Regardless of the circumstances, people struggling with debt can meet with licensed insolvency trustees. .Due to their extensive specialized training, he said they are the most qualified, educated debt relief professionals in Canada, offering guidance on debt relief options, including the possibility for people to negotiate with creditors and settle their debts by offering a percentage of the total amount owed. .A total of 17% of small business owners were preparing to close permanently under pressure of six-figure COVID-19 debts, according to a 2022 survey conducted by the Canadian Federation of Independent Business. .READ MORE: Nearly one in four small businesses preparing to close.“Small firms are in for a rough recovery,” said CFIB President and CEO Dan Kelly. .“Governments can step in and help by taking concrete measures.”
Canadian business insolvencies were up 36.9% year-over-year for the second quarter, reaching 1,090 filings — the highest quarterly volume since 2014. .“Higher borrowing costs are one of the biggest contributors to distress,” said Canadian Association of Insolvency and Restructuring Professionals (CAIRP) Chair Jean-Daniel Breton in a Thursday press release. .“Canadian companies may be either in need of more credit or are now faced with higher capital costs on heavy debt loads.” .Breton said higher interest rates have hurt consumer demand. .According to CAIRP, the financial burden of high interest rates has increased the stress on businesses and the significant increase in insolvencies means more of them are under pressure of weakening economic growth, high interest rates, and inflation..Many small business owners overlook bankruptcy options versus walking away from insolvency, said Breton. .Rather than opt to shut down their businesses and abandon them, he said those facing insolvency should consider seeking professional guidance about potential debt relief solutions to restructure or wind down their operations..Licensed insolvency trustees are the sole professionals authorized to administer government-regulated insolvency options. .“Seeking their expertise can provide valuable insights and assistance in navigating the available avenues for debt resolution,” said Breton. .While the exact consequences of business insolvency depend on several factors, CAIRP said but it is possible to preserve it through restructuring or corporate workouts..Through a comprehensive review of the operations and finances of the business, it said licensed insolvency trustees use their extensive specialized training and knowledge of governing legislation to guide them through financial hardship..Business insolvencies for the one-year period ended in June, increasing by 37.8% compared with the same period last year. Accommodation and food services, retail trade, manufacturing. and construction registered the largest increases. .CAIRP continued by saying Canadian consumer insolvencies reached 23.5% in the second quarter of 2023 compared to the same one last year, heading on an upward trend toward pre-pandemic levels..An average of 343 people filed for consumer insolvency each day in the second quarter of 2023, leading to a cumulative count of 31,244. .“Consumer insolvencies in Canada are steadily rising, reaching levels comparable to those observed before the pandemic,” said CAIRP Vice Chair Andre Bolduc. .“The upward trend is attributed to escalating debt-carrying costs and inflation, with the potential for consumer insolvencies to surpass pre-pandemic averages later this year.”.Bolduc said mounting debt and rising interest rates might “push more individuals to consider insolvency as a viable option, given the increasingly challenging task of managing their debt obligations in the current higher rate environment.”.Debt challenges contributing to insolvency arise from a combination of financial setbacks. Regardless of the circumstances, people struggling with debt can meet with licensed insolvency trustees. .Due to their extensive specialized training, he said they are the most qualified, educated debt relief professionals in Canada, offering guidance on debt relief options, including the possibility for people to negotiate with creditors and settle their debts by offering a percentage of the total amount owed. .A total of 17% of small business owners were preparing to close permanently under pressure of six-figure COVID-19 debts, according to a 2022 survey conducted by the Canadian Federation of Independent Business. .READ MORE: Nearly one in four small businesses preparing to close.“Small firms are in for a rough recovery,” said CFIB President and CEO Dan Kelly. .“Governments can step in and help by taking concrete measures.”
