Increase in Business and Consumer Insolvencies Seen in First Quarter – Business News

Business insolvencies in Canada have skyrocketed in the first quarter of 2024, with a staggering 87.2% increase year-over-year, according to data from the Office of the Superintendent of Bankruptcy. This surge in insolvencies is the largest in 37 years of recorded data, with a total of 2,003 business insolvencies, 1,599 of which were bankruptcies.

The Canadian Association of Insolvency and Restructuring Professionals (CAIRP) attributes this sharp rise in business insolvencies to the financial strain caused by pandemic debt, higher costs, declining consumer spending, and rising interest rates. Small and medium-sized businesses are particularly vulnerable, with limited options for restructuring, leading some to opt for closure instead of formal insolvency proceedings.

Consumer insolvencies also saw a notable increase, rising by 14% in the first quarter of 2024. The majority of consumer insolvencies were in the form of proposals, indicating a significant financial burden on Canadian households. CAIRP warns that despite a potential interest-rate cut from the Bank of Canada, many Canadians are still grappling with insurmountable debt burdens, including credit card debt and high mortgage rates.

CAIRP chair André Bolduc expressed concern over the economic challenges facing Canadians, such as high mortgage renewal rates, soaring rental prices, and elevated costs of everyday necessities. The organization urges individuals and businesses to seek financial assistance and explore options for debt relief to navigate through these challenging times.