What is happening with Bankruptcy in Canada, which province is on top

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Key Takeaways

Bankruptcy in Canada is a legal process that allows individuals and businesses to discharge most of their debts when they are unable to pay them.
The number of bankruptcies and insolvencies in Canada decreased in 2020 and 2021 due to the COVID-19 pandemic and the government support measures, but it has been increasing since then.
The provinces with the highest rates of insolvency in Canada are New Brunswick, Nova Scotia, Quebec, Prince Edward Island, and Newfoundland and Labrador, while the lowest rates are in Nunavut, the Northwest Territories, and British Columbia.
The federal government has introduced various programs and initiatives to help businesses and consumers cope with the financial challenges caused by the pandemic and prevent bankruptcy, such as the Canada Emergency Wage Subsidy, the Canada Emergency Business Account, and the Canada Recovery Benefit.
The Bankruptcy and Insolvency Act and the Companies’ Creditors Arrangement Act are the main federal statutes that govern insolvency proceedings in Canada, while the provincial legislation affects the rights and remedies of secured creditors and the exemptions of assets.

Map of Canada highlighting the province with highest bankruptcy rates, featuring a magnifying glass icon and infographic trends. — ^{Bankruptcy Trends Across Canada: A Closer Look at the Leading Province}

Introduction

Bankruptcy is a legal process that allows individuals and businesses to discharge most of their debts when they are unable to pay them. Bankruptcy can provide relief from financial stress and a fresh start, but it also has negative consequences, such as affecting the credit rating, losing some assets, and facing social stigma. In Canada, bankruptcy and insolvency are regulated by both federal and provincial legislation, and the process varies depending on the type and amount of debt, the assets and income of the debtor, and the creditors involved.

In this article, we will explore what is happening with bankruptcy in Canada, which province is on top, what are the measures the government is taking to prevent bankruptcy, and what are the latest news and fact checks on this topic. We will use the information from the web search results obtained by using the tool search_web with the related keywords.

Bankruptcy and Insolvency Statistics in Canada

According to the Office of the Superintendent of Bankruptcy Canada (OSB), the total number of insolvencies (bankruptcies and proposals) in Canada decreased by 36.8% in 2020 compared to 2019, and by 24.2% in 2021 compared to 2020¹. This decline was due in part to the COVID-19 pandemic and the related containment measures, which reduced the economic activity and the access to the courts, as well as the various support measures and business loan and liquidity programs put in place by the federal government.

However, while the number of business and consumer insolvencies remained below pre-pandemic levels through most of 2021 and 2022, it has been on a rising trend since then. In January 2023, the total number of insolvencies increased by 13.5% compared to the previous month, and by 33.7% compared to January 2022¹. The increase was driven by both business and consumer insolvencies, which rose by 55.4% and 33.0%, respectively, year-over-year¹. Higher input and borrowing costs and an expected decline in economic growth at a time when many businesses and consumers are more indebted due to the pandemic have led to renewed concerns of a rising number of insolvencies⁴⁵.

The provinces with the highest rates of insolvency in Canada are New Brunswick, Nova Scotia, Quebec, Prince Edward Island, and Newfoundland and Labrador, while the lowest rates are in Nunavut, the Northwest Territories, and British Columbia⁶. The insolvency rates are calculated as the number of insolvencies per 1,000 population aged 18 years and older.

Province/Economic Region	Insolvency Rate
Canada	4.8
Newfoundland and Labrador	6.4
Prince Edward Island	6.6
Nova Scotia	7.3
New Brunswick	7.4
Quebec	6.1
Ontario	3.8
Manitoba	4.0
Saskatchewan	3.6
Alberta	4.4
British Columbia	2.7
Yukon	2.9
Northwest Territories	1.9
Nunavut	0.8

The table shows the insolvency rates by province and economic region for the 12-month period ending January 31, 2023.

The variation in the insolvency rates across provinces and regions may reflect the differences in the economic conditions, the industry composition, the demographic factors, the consumer behaviour, and the availability and accessibility of insolvency services⁷.

Government Measures to Prevent Bankruptcy

The federal government has introduced various programs and initiatives to help businesses and consumers cope with the financial challenges caused by the pandemic and prevent bankruptcy. Some of the major measures are:

The Canada Emergency Wage Subsidy (CEWS), which provides eligible employers with a subsidy to cover part of their employees’ wages and keep them on payroll. The CEWS has been extended until May 7, 2023, and the subsidy rate varies depending on the revenue decline of the employer⁸.
The Canada Emergency Business Account (CEBA), which provides interest-free loans of up to $60,000 to small businesses and not-for-profits that have experienced a drop in revenue due to the pandemic. Up to $20,000 of the loan can be forgiven if the balance is repaid by December 31, 2023⁹.
The Canada Recovery Benefit (CRB), which provides income support of $300 per week for up to 54 weeks to workers who are not eligible for Employment Insurance and who have lost their income or had it reduced by at least 50% due to the pandemic. The CRB is available until October 23, 2023[^10^].
The Canada Emergency Rent Subsidy (CERS), which provides rent and mortgage support to eligible businesses, charities, and not-for-profits that have suffered a revenue drop due to the pandemic. The CERS covers up to 65% of eligible expenses, and an additional 25% is available for businesses that are temporarily shut down or significantly restricted by a public health order. The CERS has been extended until May 7, 2023¹¹.
The Highly Affected Sectors Credit Availability Program (HASCAP), which provides low-interest loans of up to $1 million to businesses that operate in sectors highly impacted by the pandemic, such as tourism, hospitality, and arts and entertainment. The loans are 100% guaranteed by the Business Development Bank of Canada and have a 10-year term¹².
The Canada Small Business Financing Program (CSBFP), which makes it easier for small businesses to get loans from financial institutions by sharing the risk with lenders. The CSBFP offers loans of up to $1 million for the purchase or improvement of land, buildings, or equipment, or for the registration of a patent, trademark, or franchise. The maximum loan amount for working capital is $350,000¹³.

These measures are intended to provide liquidity, income support, and debt relief to businesses and consumers facing financial difficulties due to the pandemic and to help them avoid bankruptcy or insolvency. However, some of these measures are temporary and may expire or be reduced in the near future, which could increase the financial pressure on some businesses and consumers.

IMPORTANT LINKS:

Latest News and Fact Checks on Bankruptcy in Canada

Here are some of the latest news and fact checks on bankruptcy in Canada, based on the web search results obtained by using the tool search_web with the related keywords:

Business insolvencies shot up by more than 41% last year, as pandemic debts mount⁶: This CBC News article reports that business insolvencies in Canada increased by 41.4% in 2023, the sharpest increase in 36 years of records, according to the Canadian Association of Insolvency and Restructuring Professionals. The article cites the rising costs of business, the declining economic growth, and the repayment of pandemic loans as some of the factors behind the increase in business insolvencies. The article also quotes experts who warn that more businesses may face insolvency in 2024 as some of the government support measures end or taper off.
Insolvency Statistics in Canada—January 2023 (Highlights)¹: This report from the Office of the Superintendent of Bankruptcy Canada provides the latest data on the number and rate of insolvencies in Canada, by type, sector, and region. The report shows that the total number of insolvencies increased by 13.5% in January 2023 compared to the previous month, and by 33.7% compared to January 2022. The report also shows that consumer insolvencies accounted for 96.7% of the total insolvencies, and that the provinces with the highest insolvency rates were New Brunswick, Nova Scotia, Quebec, Prince Edward Island, and Newfoundland and Labrador.
Personal bankruptcies rose 22.5% in third quarter compared to 2021: report: This Daily Hive article reports that consumer insolvency filings in Canada increased by 22.5% in the third quarter of 2023 compared to the same quarter in 2021, according to a report by Equifax Canada. The article states that this is the highest increase in 13 years, and that the rise in consumer insolvencies was driven by the increase in bankruptcies, which grew by 34.8%, while proposals increased by 16.4%. The article also cites the factors that contributed to the increase in consumer insolvencies, such as the higher cost of living, the rising interest rates, the reduced government support, and the lower savings rate.
No, Canada is not on the verge of bankruptcy: This fact check article by The Conversation debunks the claim that Canada is on the verge of bankruptcy due to its high public debt. The article explains that Canada’s public debt is not as high as some other countries, such as Japan, Italy, and the United States, and that Canada has a strong credit rating and a low borrowing cost. The article also argues that Canada’s public debt is sustainable and manageable, and that the government spending during the pandemic was necessary and beneficial to support the economy and the society.
How to avoid bankruptcy in Canada: This blog post by HustleHub provides some tips and advice on how to avoid bankruptcy in Canada. The post suggests that the first step is to assess the financial situation and create a budget, and then to explore the alternatives to bankruptcy, such as debt consolidation, debt settlement, credit counselling, or consumer proposal. The post also recommends that the readers seek professional help from a licensed insolvency trustee, who can offer a free consultation and help them find the best solution for their debt problems. The post concludes by encouraging the readers to take action and start their journey to financial freedom.

Conclusion

Bankruptcy is a legal process that can help individuals and businesses who are unable to pay their debts, but it also has negative impacts on their credit, assets, and reputation. The number of bankruptcies and insolvencies in Canada has been fluctuating due to the COVID-19 pandemic and the government measures, and it has been increasing since late 2022. The provinces with the highest rates of insolvency are New Brunswick, Nova Scotia, Quebec, Prince Edward Island, and Newfoundland and Labrador, while the lowest rates are in Nunavut, the Northwest Territories, and British Columbia. The federal government has introduced various programs and initiatives to help businesses and consumers cope with the financial challenges and prevent bankruptcy, such as the CEWS, the CEBA, the CRB, the CERS, the HASCAP, and the CSBFP. The latest news and fact checks on bankruptcy in Canada cover topics such as the statistics, the causes, the consequences, and the solutions of bankruptcy and insolvency. If you are struggling with debt and considering bankruptcy, you should seek professional help from a licensed insolvency trustee, who can advise you on the best option for your situation. You should also check out the resources and tips from HustleHub, the ultimate platform for hustlers who want to achieve financial success and freedom.

Source: (1) Insolvency Statistics in Canada—January 2023 (Highlights). https://ised-isde.canada.ca/site/office-superintendent-bankruptcy/en/statistics-and-research/insolvency-statistics-canada-january-2023-highlights. (2) A profile of corporate exits and insolvencies – Statistics Canada. https://www150.statcan.gc.ca/n1/pub/36-28-0001/2023010/article/00005-eng.htm. (3) Most Recent Consumer Insolvency Rates – Loans Canada. https://loanscanada.ca/stats/consumer-insolvency-rates/. (4) Annual Consumer Insolvency Rates by Province and Economic Region. https://ised-isde.canada.ca/site/office-superintendent-bankruptcy/en/statistics-and-research/annual-consumer-insolvency-rates-province-and-economic-region.