2023 Sees Record Spike in Business Insolvencies Report Reveals

07 Feb, 2024

2023 Sees Record Spike in Business Insolvencies Report Reveals

Business insolvencies soared to unprecedented levels in 2023, marking the most substantial surge in over three decades, as outlined in a recent report. Released by the Canadian Association of Insolvency and Restructuring Professionals (CAIRP), the report revealed a staggering 41.4 percent increase in business insolvencies across Canada compared to the previous year, setting a record for the highest annual rise in 36 years. Andre Bolduc, CAIRP's chair, emphasized the financial turmoil businesses faced, citing escalating input costs, wages, and debt servicing expenses, which have intensified since the onset of the pandemic. The year witnessed a record-breaking 4,810 businesses succumbing to insolvency, the highest volume recorded in 13 years.

Provincially, Newfoundland and Labrador experienced the most significant spike in insolvencies at 141.7 percent, trailed by British Columbia and Nova Scotia at 65.4 percent and 55.6 percent, respectively. Bolduc forewarned of continued challenges ahead for businesses, particularly due to escalating interest rates compounding debt burdens.

The report also underscored a concerning trend in consumer insolvencies, surging by 23 percent in 2023, the swiftest increase in 14 years. With 123,000 Canadian consumers filing for insolvency over the year, financial strains exacerbated by inflation and rising interest rates have left many struggling to manage expenses and debt obligations. Bolduc emphasized the necessity for additional income sources or wage increases to alleviate financial pressures, cautioning against the potential need for further debt accumulation or drastic spending cuts. Notably, Manitoba, British Columbia, and Ontario saw the highest increases in consumer insolvencies, indicating widespread financial distress among households across various regions.