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Business bankruptcies across Canada have risen to their highest level in 15 years.
The latest data from the Canadian Association of Insolvency and Restructuring Professionals shows that 1,312 companies filed for bankruptcy during the third quarter of 2024, the highest level since the 2009 financial crisis.
On a yearly basis, bankruptcy filings rose in every province except New Brunswick and Newfoundland during Q3 2024.
In Ontario, bankruptcy filings rose 67% year-over-year in Q3, while bankruptcy filings in Quebec increased 40%.
The sharp rise in business insolvencies comes as federal and provincial governments remove the financial support they provided to businesses during the Covid-19 pandemic.
The federal government in Ottawa has said that more than a quarter (25%) of the small businesses that received money during the pandemic under the “Canadian Emergency Business Account” program have not met repayment deadlines over the past year.
Insolvencies have been widespread across Canada, from retail and real estate to hospitality and life sciences.
The hardest-hit sectors in the third quarter of 2024 were construction, where bankruptcies rose 37%, and food services, where insolvencies spiked 32%.
Canada’s oil patch has also taken a hit as prices for crude and natural gas slump. Oil and gas insolvencies rose to their highest level in three years during Q3 2024.
Analysts say that the current wave of bankruptcies across Canada is also being driven by a weak economy, elevated inflation, and high interest rates.
The Bank of Canada most recently lowered its benchmark interest rate by 50-basis points on Dec. 11, bringing the policy rate down to 3.25%.
Lower interest rates should help Canadian businesses moving forward, say some analysts.
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