CAIRP: Q1 2024 Canadian Insolvency Statistics

Consumer Insolvencies Increase 14% Year-Over-Year, Surpassing Pre-Pandemic Levels in Q1 2020 and Business Insolvencies Spike 87.2% Year-Over-Year, the Largest Increase in 37 Years of Records
May 3, 2024

TORONTO – May 3, 2024 – Consumer insolvency filings have reached the highest level since the fourth quarter of 2019 before the pandemic. On average, about 372 Canadians a day filed a consumer insolvency in the first quarter of this year, totalling 33,885 consumer insolvencies, according to the latest data from the Office of the Superintendent of Bankruptcy (OSB). Consumer insolvencies rose 14% in the first quarter compared to the same quarter last year, marking the eighth consecutive year-over-year quarterly increase and underscoring the persistent financial struggles faced by many Canadians.

“The number of consumer insolvencies returned to pre-pandemic levels this quarter, and the risk of insolvency still looms large for many Canadians,” says André Bolduc, Licensed Insolvency Trustee and Chair of the Canadian Association of Insolvency and Restructuring Professionals (CAIRP), the national voice on insolvency matters in Canada. "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."

Compared to the previous quarter, consumer insolvencies were 6.5% higher in the first quarter of 2024. For the 12-month period ended March 31, 2024, insolvencies filed by consumers increased 19.3% compared to the 12-month period ended March 31, 2023.

Bolduc says while economic factors such as high interest rates and inflation are putting significant pressure on Canadians’ finances, the tipping point is often a culmination of personal setbacks.

“Indebted Canadians are bearing the financial burden of higher costs, and additional financial strain can be triggered by various factors, including relationship breakdowns, unemployment or underemployment, and unexpected costs. These often serve as a tipping point for insolvency, whether it is navigating legal fees and spousal support after a divorce, coping with the challenges of reduced working hours, or dealing with the financial fallout of unexpected car repairs, medical expenses, or unpaid taxes,” explains Bolduc.

While an interest rate cut may be coming, many Canadians have already accumulated significant debt and some homeowners have locked in at higher mortgage rates, potentially limiting the relief they may be hoping for.

"Many Canadians have turned to revolving credit, such as credit cards, in the aftermath of the pandemic as a lifeline amidst depleted savings. However, this reliance on credit can quickly spiral into unsustainable debt levels,” says Bolduc. “In an already uncertain economic landscape, it's imperative for individuals to seek professional support to effectively manage their debt burdens."

Early intervention is key, according to Bolduc. Those who seek advice earlier may have a wider range of debt relief options available to them, compared to those who delay seeking help for months or even years due to shame or guilt.

As the only federally regulated debt professionals in Canada, Licensed Insolvency Trustees are legally required to complete a comprehensive assessment of the debtor’s financial situation and provide unbiased advice on all of the debt relief options available, including consumer proposals and bankruptcies. They have the authority to negotiate binding agreements with creditors and offer legal protection from creditor actions such as collection calls and wage garnishments, helping to alleviate much of the stress and anxiety debtors often feel.

Licensed Insolvency Trustees generally offer free consultations and are available across the country, even in remote locations. To find a government-regulated Licensed Insolvency Trustee visit:  

Across the provinces, Ontario had the highest rate of increase year-over-year in consumer insolvencies in the first quarter of 2024, rising 19.4% to 12,298 filings. This was followed by B.C. which experienced a 17.7% increase to 3,535 filings, and Quebec which saw a 15.5% increase to 8,874 filings.

Q1 business insolvencies spike 87.2% year-over-year, the highest rate of increase in 37 years of records

Business insolvencies in Canada surged by 87.2% in the first quarter of 2024 compared to the same quarter last year, by far the sharpest increase in 37 years of records from the OSB: a reflection of the profound economic challenges Canadian businesses are grappling with. Business insolvency filings rose 31.7% in the first quarter of this year compared to the previous quarter and are 126.8% higher than at the beginning of the pandemic in the first quarter of 2020. Over two thousand (2,003) businesses filed for insolvency in the first quarter of 2024, reaching the highest volume since the recession in 2008.

“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,” explains Bolduc “Now that the CEBA loan deadline has passed, businesses have the added financial burden of monthly loan repayments and their accompanying interest payments. These new debt obligations may make the future more difficult to navigate.”

For the 12-month period ended March 31, 2024, insolvencies filed by businesses were 56.7% higher than the 12-month period ended March 31, 2023.

Notably, small and medium-sized businesses in particular are faced with unique challenges. They often lack the resilience and access to capital that larger companies possess, leaving them with more limited options for restructuring.

“Some business owners may opt to cease operations altogether rather than pursue formal insolvency proceedings, but they should speak with a Licensed Insolvency Trustee before making decisions to shut their doors for good,” advises Bolduc. “Licensed Insolvency Trustees can provide customized advice on restructuring options and corporate workouts that can make the business viable again, or they can provide guidance on options to formally wind down the business, ensuring there is a balance between the debtor’s and creditor’s rights, and protecting employees who may be owed wages. For many small businesses, the window for restructuring is narrower, which underscores the importance of seeking out professional guidance as soon as possible.”

Licensed Insolvency Trustees are qualified to provide business owners with guidance tailored to the business’ size, structure, and assets. Through restructuring, Licensed Insolvency Trustees can help rehabilitate a business by improving operations and reorganizing their financial liabilities, effectively reducing the business’ debt burden, and allowing it to continue to operate.

The sectors experiencing the largest increases in the number of insolvencies in the first quarter of 2024 compared to the same quarter last year were accommodation and food services (+173), transportation and warehousing (+124), and construction (+100).

For media representatives who would like to speak with one of our experts, contact:

Angela Joyce
Media Relations
Tel: 403-681-9286