Industry Views & NewsMedia Releases

TORONTO – June 28, 2024 – Consumer insolvencies increased 11.3% in May compared to the same month last year, according to the latest data from the Office of the Superintendent of Bankruptcy (OSB). The volume of consumer filings reached 12,195, the highest monthly volume seen since October 2019 pre-pandemic, and an average of 393 filings by Canadians per day. Consumer insolvencies increased 3.4% in May over the previous month, marking an upward trend for the fifth consecutive month and highlighting the financial strain which continues to burden many Canadians.

“Consumer insolvency data shows many Canadians are facing ongoing financial challenges,” 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. “Despite interest rates declining, the high cost of living and the high cost of servicing debt continue to strain budgets.”

In the 12-month period which ended May 31, 2024, 130,802 consumers filed for insolvency, a 17.9% increase compared to the 12-month period which ended May 31, 2023.

“While the interest rate cut this June came as a psychological relief to many, it could still be some time before individuals start to see meaningful relief in their financial situations, particularly as rates may take some time to come down further,” says Bolduc.

Bolduc warns that homeowners who financed home purchases at low rates and are due to renew their mortgages could still face significantly higher mortgage payments, potentially leading to financial instability and increasing the risk of insolvency.

“For Canadians grappling with mounting debt burdens, rising living costs, and the prospect of higher mortgage payments, seeking timely advice from a Licensed Insolvency Trustee can be beneficial to determine if debt-relief options are necessary,” advises Bolduc. “Measures such as debt consolidation, consumer proposals or bankruptcy can offer relief for those who are deeply indebted.”

Licensed Insolvency Trustees are the most qualified and educated debt-relief professionals in Canada. They are the only debt-relief professionals authorized to administer consumer proposals and bankruptcies and are legally and ethically bound to provide accurate and unbiased advice on all the debt-relief options available.  

Accessible to Canadians nationwide, Licensed Insolvency Trustees are available across the country, even in remote locations. They generally offer free consultations to provide Canadians with a realistic picture of the debt-relief options available for an individual’s situation. To find a government-regulated Licensed Insolvency Trustee visit: www.cairp.ca/find-a-lit.html  

Amongst the provinces, Saskatchewan saw the highest rate of increase year-over-year for consumer insolvencies in May, increasing 18.8% to 347 filings. Both Ontario and Quebec shared the second-highest rate of increase at 16%, reaching 4,561 filings and 3,110 filings respectively in May.

Business insolvencies rose 41.7% year-over-year in May, marking 2.5 years of continuous increases

There were 530 business insolvencies filed in Canada in May, increasing a significant 41.7% compared to the same month last year, and marking a persistent two-and-a-half years of continuous year-over-year increases. Well surpassing pre-pandemic levels, business insolvencies in May of this year were 67.6% higher than they were in May 2019.

“The latest insolvency numbers show businesses are filing for insolvency at levels beyond what we were seeing pre-pandemic, and there are likely more businesses in financial distress that have chosen to simply close up shop and walk away without formally filing for insolvency. The numbers are just the tip of the iceberg,” explains Bolduc.

While business insolvencies were down slightly in May from the previous month (-3.8%), filings by businesses increased 57% in the 12-month period which ended May 31, 2024, compared to the 12-month period which ended May 31, 2023.

“As businesses struggle to navigate the current economic uncertainties, signs of distress among Canadian businesses are becoming clearer,” says Bolduc. “The CEBA loan deadline this year added pressure for many on top of high operating and debt servicing costs. We are seeing insolvencies continue to climb, and now more businesses are delaying tax payments as they juggle other financial obligations, increasing their debt burden.”

Bolduc emphasizes that businesses facing financial distress have options beyond bankruptcy.

“When a business is at risk of terminating its operations, it can seek protection through a debt restructuring proposal or the Companies’ Creditors Arrangement Act. A Licensed Insolvency Trustee can guide the business owner to help resolve them, either through a recovery plan, streamlining their operations, managing their growth or refinancing their activities,” says Bolduc. “It is critical for businesses in financial difficulty to seek professional guidance early on to explore restructuring options.”

Licensed Insolvency Trustees’ years of training, accounting expertise and extensive knowledge of governing legislation make them uniquely qualified to assess the unique financial and operational aspects of the business and recommend the right solution to solve the business’ debt struggles.

The sector experiencing the largest increase in the number of insolvencies in May compared to the same month last year was construction (+48). This was followed by the transportation and warehousing (+15) and professional, scientific and technical services (+15) sectors.

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

Angela Joyce
Media Relations
Tel: 403-681-9286
aj@whiterabbitpr.com