TORONTO, Jan. 04, 2019 (GLOBE NEWSWIRE) -- The number of Canadian businesses "going under" financially jumped significantly in November compared to last year, according to a new report released by the Office of the Superintendent of Bankruptcy (OSB). Total business insolvencies (bankruptcies and proposals) in November 2018 were 8.9 per cent higher than in November 2017. This represents the largest year-to-year monthly increase since August 2016. The construction sector experienced the biggest surge (up 42.2%), followed by retail trade (up 31%). Regionally, Ontario had the biggest increase (up 41.4%).
“It’s an increasingly unforgiving business environment due to rising interest rates and economic uncertainties. We’ll likely see the number of business failures continue to rise and that will accelerate the increasing number of consumer filings,” says David Lewis, board member of the Canadian Association of Insolvency and Restructuring Professionals (CAIRP), the country’s national association of insolvency and restructuring professionals.
Last month, CAIRP revealed there was almost a ten per cent increase in the number of consumer insolvencies in October 2018 compared to October 2017. Continuing on this trend, the most recent data shows an increase of 5.1 per cent in November 2018 over the previous year. Regionally, Alberta had the greatest increase (20.9%) compared to November 2017, followed by New Brunswick (up 18.3%), Manitoba (up 16.7%), Saskatchewan (up 15.6%), Newfoundland (up 15.5%), Nova Scotia (up 6.8%), Ontario (up 5.6%), British Columbia (up 1%), Quebec (down 2.1%) and PEI (down 14.9%).
“Personal insolvency growth continues as a result of consumer credit stress. With rising interest rates compounded by increased consumer spending, individuals and families are struggling with overwhelming debt and increasing debt carrying costs,” says Chantal Gingras, Chair of CAIRP which represents nearly 1,500 trustees and associates across the country.
Canadians owed $1.78 in credit market debt, which includes consumer credit and mortgage and non-mortgage loans, for every dollar of household disposable income in the third quarter. That was up from $1.77 in the second quarter.
“The lights are flashing red and have been for some time but Canadian households still aren’t lightening their debt load. It’s concerning,” says Gingras.
She adds that only a small portion of people seek professional help at the onset of debt trouble. Many continue to take on more debt in an attempt to make ends meet.
“The longer they wait, the worse the situation. The first step for anyone struggling is to get a clear picture of their debts and to devise a plan. Doing this on your own can be challenging, so it is important to seek advice from a professional,” she says.
Licensed Insolvency Trustees are the only professionals licensed by the federal government to deal with consumer and business debt restructuring.
ABOUT CAIRP
The Canadian Association of Insolvency and Restructuring Professionals (CAIRP) is the national professional organization representing more than 980 members working in the insolvency system, as well as over 500 articling, life and corporate associates.
CONTACT
Angela Joyce, Media Relations
p. 1.403.681.9286
e. aj@whiterabbitcommunications.com