Figure 9: CCAA Proceedings in Canada (2018–2024) Figure 9: CCAA Proceedings in Canada (2018–2024)
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Q4 of 2024 had the highest number of CCAA proceedings in a quarter since the beginning of 2018, with a total of 38 filings (see Figure 9). In comparison, the whole of 2022 had a total of 31 filings. Notably, CCAA activities did not decrease in tandem in the later half of 2024 with the decrease of business insolvencies discussed earlier. The growing popularity of cross-border restructurings, by way of recognition proceedings both by U.S.-based businesses under Part IV of the CCAA and by Canadian-based businesses under Chapter 15 of the U.S. Bankruptcy Code, also contributed to the higher volumes of CCAA proceedings in Canada. Moreover, in 2025, we expect CCAA activity to be sustained by firms harmed by U.S. tariff policy and a weaker Canadian dollar. Over a period of prolonged market uncertainty, even businesses with healthy business models and margins can find themselves with insufficient cash reserves or financing options, forcing them to seek protection under insolvency regimes. When the U.S. tariffs were imposed between 2018 and 2019, about 29 CCAA proceedings were recorded in Canada. In terms of volume, this level of activity is relatively modest, averaging 7.25 proceedings per quarter. The spike to 13 proceedings in Q1 of 2019 is likely also attributable to U.S. and Canadian interest rate hikes at the time. For Q1 and Q2 2018, when businesses were largely spared unexpected tariffs, the quarterly average was 4 proceedings. After tariffs were lifted, by Q3 2018, the average quarterly number of proceedings during Q3 and Q4 2018 rose to 10.5. Given substantial differences in the global economic climate, greater uncertainty as to what conditions could remove trade barriers, and how businesses worldwide are tested by severe and changing trade shocks, the experience of 2018-2019 tariffs likely offers only limited guidance for the potentially more severe impact of the 2025 tariffs.
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Davies | dwpv.com
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