As we predicted in earlier issues of Insolvency Now , the year 2023 reflected the expected increase in business insolvency activity.
In this issue of Insolvency Now we detail the following findings from our data:
– Business insolvencies reached the highest volume in 2023 since 2019, with a 41.4% increase over insolvencies in 2020 and a 30.7% increase over those in 2019. While detailed data is not available on the total assets, debt or number of employees of businesses that file, our analysis of business openings and closings and the requirement for repayment of government subsidized loans suggests that smaller businesses are driving the increasing filing rates. – Business insolvencies spiked in Q4 2023, especially in Québec and Ontario. However, the proportion of commercial proposals versus bankruptcies decreased, suggesting potentially fewer refinancing options for businesses and that an increasing number of smaller businesses versus larger businesses are filing. – Construction, accommodation and food services, and retail were the sectors with the greatest business insolvency activity in 2023, while professional, scientific and technical services also experienced a significant rise in filings. – Receiverships returned to the elevated levels of 2019 and 2020 in terms of volume, but the value of declared assets was significantly lower in 2023. – CCAA proceedings also increased substantially in 2023, with the highest activity in the manufacturing and retail sectors and in Québec, Ontario, Alberta and British Columbia. Next, we consider the outsized role of small businesses in Canada and the data on openings and closings. We conclude by reviewing the high level of insolvency- related leave applications to the Supreme Court of Canada and note the potential case law implications that we are watching and will report on in future Insolvency Now issues. Davies Insolvency Now is a publication authored by Natasha MacParland, Robin B. Schwill and Stephanie Ben-Ishai that analyzes key trends and developments in the insolvency and restructuring community.
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Davies Insolvency Now: Issue 10
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