After two years of the pandemic, the number of business and personal insolvency files increased during the first quarter of 2022, a situation that is unlikely to improve with the effect of inflation starting to rise. to be felt.
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A 33.8% increase in insolvency cases was recorded among Canadian businesses compared to the first quarter of 2021, representing the largest year-over-year increase in 31 years.
“The number of companies declaring bankruptcy or filing a proposal is increasing, and the situation is likely to get worse due to the stress caused by inflation and as the cracks start to appear after the withdrawal of government assistance linked to the pandemic,” Jean-Daniel Breton, president of the Canadian Association of Insolvency and Restructuring Professionals (CAIRP), said Thursday in a press release.
And the jump was also felt in the space of a few weeks, with the rate rising by 10.1% between the last quarter of 2021 and the first of 2022, then approaching the levels recorded at the start of the health crisis.
“Inflation is now at its highest level in 30 years and the Bank of Canada, seeking course correction, has made several interest rate hikes this year, so it should come as no surprise to see the number of business insolvency files increase even more,” said Mr. Breton.
The sectors that have faced the greatest increase in insolvency files are those of construction, transport and warehousing.
Individuals not spared
On the personal side, a 4% increase in the number of insolvency files was seen in the first quarter of 2022 compared to the previous quarter.
A slight improvement was however noted compared to the first quarter of 2021 (-2.8%) and to that of 2020 (-30.3%).
“The increase in the cost of living in the wake of the pandemic has created serious financial difficulties for many Canadians, while the fallout will become evident in the weeks and months to come,” said André Bolduc, vice president. -Chairman of CAIRP’s Board of Directors and Licensed Insolvency Trustee.
The number of insolvency files also increased particularly between February and March 2022, with a jump of 24.4%.
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