Record surge in insolvencies a 'problematic' sign of small-business closures

A report from the Office of the Superintendent of Bankruptcy released Friday found 4,810 businesses filed insolvencies in 2023.

New data show the number of Canadian businesses filing insolvencies has increased at a record rate.

A report from the Office of the Superintendent of Bankruptcy released Friday found 4,810 businesses filed insolvencies in 2023.

The Canadian Association of Insolvency and Restructuring Professionals (CAIRP) says it's an increase of 41.4 per cent from the year prior and the largest jump in 36 years of records.

André Bolduc, a licensed insolvency trustee and chair of the CAIRP, believes the rise is due to economic pressures and the recent payment deadline for CEBA loans given by the federal government during the COVID-19 pandemic.

"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. That strain, combined with any additional financial challenges or setbacks this year could force businesses to shutter," Bolduc said.

Bolduc notes insolvency rates were rising to catch up to pre-pandemic norms, but they've now surpassed previous figures and are likely to continue to rise in 2024.

The Canadian Federation of Independent Business (CFIB) says Friday's report only represents a small fraction of businesses forced to close their doors.