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Bankruptcies are soaring, but especially in Canada – today news

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Business insolvencies in this country jumped the most in 36 years of records

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Business insolvencies in Canada jumped the most in 36 years of records in 2023, as debt costs rose and the economy weakened.

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The number of businesses that filed for insolvency was the highest in 13 years, according to figures out last week from the federal Office of the Superintendent of Bankruptcy.  Filings rose 35 per cent in the fourth quarter from the third and more than doubled compared to the same quarter a year ago. 

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The rise was mainly due to bankruptcies, rather than a renegotiation of terms, said Charles St-Arnaud, chief economist for Alberta Central.  Bankruptcies were up 75.6 per cent year over year, mostly in  accommodation and food services, retail and construction.

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Oxford Economics

“Businesses have been struggling to cope with a myriad of financial challenges over the past year, including higher input costs, wage costs, and debt servicing costs, exacerbating the rocky footing many have been on ever since the pandemic,” said André Bolduc, chair of the Canadian Association of Insolvency and Restructuring Professionals (CAIRP). 

Bolduc said debt taken on during the pandemic is weighing on some Canadian businesses to the point where they are no longer viable or need debt restructuring.

Business owners who were unable to pay back government pandemic loans known as CEBA by the Jan. 19 deadline now have to pay five per cent interest and make monthly payments on what was previously an interest-free loan with no monthly payments, CAIRP says.

Those who refinanced government loans to receive partial debt forgiveness are now paying higher interest rates. 

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“Many businesses are already on a razor’s edge. The additional costs to service their debts due to higher interest rates will mean even less room to cover increasing costs of business going into 2024,” said Bolduc.

The weakening economy has also cut into consumer spending, adding more pressure to businesses’ bottom line. 

 The volume of spending in Canada, on a per-person basis, is well below pre-pandemic levels and nearing levels seen only in recessions, said a recent report from CIBC. 

“Some businesses may not be able to manage the increases to their monthly bills, especially if they are already finding it difficult to drum up sales,” said Bolduc. “That strain, combined with any additional financial challenges or setbacks this year could force businesses to shutter.” 

According to Statistics Canada, there were 44,236 business closures in October 2023, with the highest numbers seen in retail, construction and transportation and warehousing.  

“Often, we see business owners close up shop and simply walk away rather than taking formal steps to wind the business down or get restructuring advice,” said Bolduc.

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The same trends are playing out globally. Bankruptcies have climbed on average by almost 50 per cent across the G7 from 2021 to 2023, says Oxford Economics.

“But while the surge in bankruptcies sounds alarming, it comes from abnormally low levels during the pandemic,” said Oxford economist Adam Slater.

During COVID-19 businesses were artificially supported by direct government aid, bank forbearance and low interest rates. “A rebound was always going to happen when these supports started to fall away,” he said. 

Even so, bankruptcy levels are higher than Oxford modelling predicted, especially in Canada and the United Kingdom.

These two economies and others where bankruptcies are high tend towards floating-rate corporate borrowing, so companies must deal with the costs of higher interest rates sooner. In markets where fixed-rate borrowing is more common such as the United States bankruptcies are below or close to 2019 levels, said Slater. 

Oxford predicts a further double-digit increase in bankruptcies this year, and in some markets into 2025. But it only expects these to reach really worrying levels if the downturn in advanced economies is much worse than it forecasts. 

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Financial Post

Friday’s “superbowl jobs report” turned the narrative of a slowdown in the United States on its head and quashed hopes the Federal Reserve would cut rates next month.

The U.S. economy gained a “monstrous” 353,000 jobs in January, the highest increase in a year that solidly beat expectations.

Its strength jolted the bond market, sending yields higher.

January is a difficult month to adjust for seasonality, but given that job growth was revised higher for the previous months, “it is hard to see a weakening trend,” said Oxford Economics senior economist Bob Schwartz.

Market bets on a March cut are now at 38 per cent with a 60 per cent chance of a cut in May.


  • Alberta Premier Danielle Smith will give a speech at an Economic Club of Canada event in Ottawa today. Smith has been at odds with the federal government and its climate-change policies and transition plan for a net-zero emissions economy.
  • Today’s Data: Bank of Canada Market Participants Survey
  • Earnings: Tyson Foods, McDonalds, Caterpillar, TMX Group

Get all of today’s top breaking stories as they happen with the Financial Post’s live news blog, highlighting the business headlines you need to know at a glance.

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