The total number of insolvencies (bankruptcies and proposals) in Canada increased by 9.3 per cent in 2019 compared with 2018, the highest number since 2009, according to data released by the Office of the Superintendent of Bankruptcy.
And Alberta numbers spiked as well.
In the province, the total number of insolvencies of 16,898 in 2019 were 14.5 per cent higher than the previous year. Bankruptcies jumped by 12.9 per cent to 5,744 while proposals were up 15.3 per cent to 11,154.
Bankruptcy is defined as the state of a consumer or a business that has made an assignment in bankruptcy or against whom a bankruptcy order has been made.
Proposal is an offer to creditors to settle debts under conditions other than the existing terms. A proposal is a formal agreement under the Bankruptcy and Insolvency Act.
In Alberta, consumer insolvencies reach 16,675 in 2019 which was up 14.6 per cent from the previous year. That comprised 5,589 bankruptcies, up 13.5 per cent, and 11,086 proposals, up 15.1 per cent.
For businesses in the province insolvencies rose by 8.3 per cent to 223. Bankruptcies fell by 4.3 per cent to 155 but proposals were up by 54.5 per cent to 68.
The federal office said consumer insolvencies in Canada for the 12-month period ending December 31, 2019, increased by 9.5 per cent compared with the 12-month period ending December 31, 2018. Consumer bankruptcies decreased by 1.2 per cent, while consumer proposals increased by 17.9 per cent.
“The proportion of proposals in consumer insolvencies increased to 60.3 per cent during the 12-month period ending December 31, 2019, up from 56.0 per cent during the 12-month period ending December 31, 2018. For the 12-month period ending December 31, 2019, consumer insolvency filings accounted for 97.4 per cent of total insolvency filings,” it said.
“Business insolvencies for the 12-month period ending December 31, 2019, increased by 2.8 per cent compared with the 12-month period ending December 31, 2018. The three sectors that registered the biggest increase in the number of insolvencies were manufacturing; professional, scientific and technical services; and wholesale trade. Construction; accommodation and food services; and retail trade experienced the biggest decrease in insolvencies.”
In a commentary note, Scotiabank Economics said consumer insolvencies trended upward on the backdrop of rising household debt burdens, sparking concern over the ability of households to manage their debt.
Mario Toneguzzi is a business reporter in Calgary.
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