There has been an increase in business insolvencies across Canada over the last year, but BC has seen increases above the national average.
MNP Insolvency Professional Dean Prentice says low interest rates over the last number of years has made it easier to access credit and borrow money to grow businesses. But, recent issues like tariffs and mills shutting down have made it more difficult to attract interest. “And I think the interesting part is in British Columbia, the rise year on year has actually been over 23% in business insolvencies, bankruptcies and proposals, which is a remarkable increase over the year.”
Prentice says the high numbers here are partially due to the industries that BC relies on. “The resource industries are having a tough time. Mining in the interior, oil & gas up in the Peace [region], softwood lumber. But the trend hasn’t just started now. There’s been an increases that’s been going on for the last year.” Prentice says despite a rise in insolvency rates, bankruptcy rates haven’t increased which indicates businesses are trying to work out deals with creditors. “I think it is interesting though, with businesses compared to personal insolvencies, business bankruptcies have actually gone down year on year. So more businesses are actually restructuring, doing a proposal. Which means they may not actually be going out of business but they’re trying to negotiate a settlement with creditors.” Prentice believes that is encouraging because it keeps businesses going and keeps people employed.
Comparing the past 12 months to September 2019 with the previous year, there has been a double-digit increase in the number of business filings in Newfoundland (+70.8%), British Columbia (+23.4%) and Alberta (+9.9%). Ontario (+4.1%) and Quebec (+2.6%) experienced more modest percentage increases but together accounted for over eighty (83%) of the total business insolvencies in Canada over the past 12 months. Saskatchewan (-14.9%) is the only province to have experienced a decline over the past 12 months.
