Canadian consumer insolvencies rose significantly in 2023, up 26.2% in Ontario and 23.0% across Canada. The latest Hoyes Michalos 2023 Joe Debtor insolvency data is available here. Doug Hoyes explains the findings below.

What’s distressing to me is the person filing for insolvency is someone with higher income than in the past, says Doug Hoyes, co-founder of Hoyes, Michalos & Associates. Here is a direct video link.

Meanwhile, it’s not just households that are stumbling under record debt weight: Canadian business insolvencies rose 34.7% in the final quarter of 2023, some 51.6% higher than the same quarter in 2022. For the full year 2023, regulatory filings show 4,810 insolvencies, an increase of 41.4% over 2022. Growth at this scale has never been seen in the past 36 years of filing data. See, Canadian Business Insolvencies Surge to Record Growth, Worse Than the Data Shows:

“Businesses have been struggling to cope with a myriad of financial challenges over the past year, including higher input costs, wage costs, and debt servicing costs, exacerbating the rocky footing many have been on ever since the pandemic,” says André Bolduc, the Chair at CAIRP, an industry organization representing insolvency professionals.

Rising insolvency filings don’t reveal the whole picture as national statistics estimate 44,236 businesses closed in October, nearly 5,000 more than opened over the same period:

“Often, we see business owners close up shop and simply walk away rather than taking formal steps to wind the business down or get restructuring advice,” explains Bolduc.

Further explaining, “These business owners are missing out on professional guidance on restructuring and corporate workouts that could preserve the ongoing business operations.”

However, preserving the businesses still leaves the entrepreneurs with a challenging operating environment. Typically, the peak of every housing cycle sees the displacement of consumption towards “inefficient” or “non-productive” allocation, such as rents. If these businesses could mitigate the high debt loads and rising costs, does their customer base still have discretionary spending to consume their products and services?