Economics

Business and consumer insolvencies rise in May from last year

CAIRP Chair: Business insolvencies in Canada jumped the most in 36 years of records in 2023 André Bolduc, chair of the Canadian Association of Insolvency and Restructuring Professionals (CAIRP), joins The Close to discuss a year-over-year spike in Canadian businesses filing for insolvencies - a surge that saw the number of insolvencies rise up to its highest level in 13 years.

Canadian insolvencies rose in May from last year as elevated inflation and interest rates continue to hit businesses and consumers.

Data from the Office of the Superintendent of Bankruptcy released Friday shows total insolvencies were up 19.2 per cent from May 2023 and up 3.1 per cent from April.

The data shows many Canadians are facing ongoing financial challenges, said André Bolduc, chair of the Canadian Association of Insolvency and Restructuring Professionals (CAIRP) in a statement.

“Despite interest rates declining, the high cost of living and the high cost of servicing debt continue to strain budgets.”

The overall figures came as consumer insolvencies, which include both bankruptcies and proposals, totalled 12,195 in May. The represents a rise of 3.4 per cent from April and an increase of 11.3 per cent from last year.

May marked the fifth consecutive month-over-month rise in consumer insolvencies to put them at their highest volume since October 2019, said CAIRP.

Business insolvencies were down from April, falling 3.8 per cent to 530, but up 41.7 per cent from last year.

Some sectors have seen steeper rises though, such as construction where the 92 insolvencies worked out to a 24.3 per cent increase from April and was up 109.1 per cent from May last year.

Business insolvencies are well above pre-pandemic levels, said CAIRP, including 67.6 per cent above the May 2019 level.

It said year-over-year business insolvency levels have been continuously rising for 2.5 years.

This report by The Canadian Press was first published June 28, 2024.