ADVISORY: Bankruptcies in 2020 – A Year in Review  

January 20, 2021


Leonard Hiquebran CPA, CA, CIRP, LIT

BRITISH COLUMBIA – To say 2020 has been a unique year would be somewhat of an understatement. In fact, it could be called the year of the roller coaster. This time last year I was preparing to celebrate another Christmas with my extended family and friends but this year due to the lockdowns and travel restrictions that won’t be happening.

Concepts such as travel restrictions, lockdowns, social distancing were unknown to most of us, yet today they are part of our everyday language as the Covid-19 pandemic continues to impact all of our lives.

Business Insolvencies

It will not be surprising to most people to know that due to the pandemic a lot of people and businesses suffered financially. Some well established businesses contacted us for advice because their customer base had simply disappeared.

Throughout 2020 some of Canada’s most iconic companies have filed for creditor protection either using the Bankruptcy and Insolvency Act or the Companies’ Creditors Arrangement Act.  Companies such Le Chateau Inc. Le Chateau Inc, Moores the Suit People Corp, David’s Tea Inc. Cirque Du Soleil Canada Inc, and Mountain Equipment Co-Operative have all been affected financially by the Covid-19 pandemic and filed for some type of protection from their creditors. While some may survive to see another day such as Air Canada did in 2003, others will go the way of Sears Canada and Target and be nothing but a memory for most.

While most people would think that due to the pandemic, 2020 would have been a year with more corporate insolvencies. This is not true as according to the Office of the Superintendent of Bankruptcy for the 12 month period ending October 31st, 2020 – 2,953 businesses filed either a bankruptcy or a proposal. However, for the 12 month period ending October 31st 2019 – 3,712 businesses had filed.  That is a year to year reduction of over 20 per cent.

Although there are no statistics available as to what caused this reduction it can be argued that it is likely due to the unprecedented response the Canadian Government put in place to aid business over the past 9 months. Options such as the CEBA (Canada Emergency Business Account), CERS (Canada Emergency Rent Subsidy), and the CEWS (Canada Emergency Wage Subsidy) helped businesses avoid having to file insolvency during the pandemic and keep their operations afloat.

Although I’ve heard some say that this is only a Band-Aid approach and simply delaying the inevitable, only time will measure the success of the efforts put forward by the Canadian Government to protect Canada’s business.

Related : Do you work for a company that recently filed for insolvency?, if so visit our blog: What do I do when my employer goes Bankrupt.

Personal Insolvencies 

How about individuals? According to a CBC report during the peak of the pandemic the unemployment rate in Canada was over 13 per cent and nearly two million Canadians had lost their jobs. Surely given this information the rate of insolvencies must’ve increased year over year?

Reviewing the statistics provided by the Office of the Superintendent of Bankruptcy for the 12 month period ending October 31st, 2020 – 103,184 consumers filed either a bankruptcy or a proposal. However, for the 12 month period ending October 31st 2019 –  135,482 consumers had filed. That is a year to year reduction of nearly 24 per cent.

Again there are no statistics available as to what caused this reduction. It can be argued that what allowed Canadians to avoid filing for insolvency, is likely due to the relaxed collection actions by most lenders combined with the unprecedented response by Canadian Government to provide aid for Canadians. Never in recent memory have consumers faced:

  • Direct payments of billions of dollars to millions of Canadians across the country
  • Payment Deferrals
  • Canada Revenue Agency not collecting on outstanding debt or garnishing
  • Lockdowns, so no spending
  • Special one time increase in OAS, CCB and GST to help Canadians
  • Moratorium on rent increases
  • Near 0% interest rates

Looking Ahead

With a vaccine recently approved, 2021 is looking as though it will be a lot better than 2020. With the end of the pandemic in sight (hopefully) it is likely the benefits and support provided by the Canadian Government will end as well.

Income support for individuals such as CERB (Canada Emergency Response Benefit), CRB (Canada Recovery Benefit) will soon be complete and with that a source of income for thousands of Canadians will be gone. This combined with renewed collection actions by creditors, and an economy that is not yet fully recovered – will likely result in an uptrend in the amount of insolvencies being filed.

In fact this was claim was recently supported by Mark Rosen, the Chair of the Canadian Association of Insolvency and Restructuring Professionals (CAIRP),  who stated:

“We are starting to see modest increases month-over-month, but overall government stimulus coupled with debt forbearance have depressed filings thus far into the COVID pandemic”.

While the full economic consequences of the pandemic are still unknown, one thing that can be assured is that creditors will eventually seek to catch individuals up on their missed payments.

Anyone struggling to make current payments, let alone make up for missed payments, should seek the advice of a Licensed Insolvency Trustee before getting themselves further in over their heads. For a free consultation reach out to Derek L. Chase & Associates to discuss your current situation and what options are available for you to get a fresh start.

Len Hiquebran, CPA, CA, LIT, Licensed Insolvency Trustee

After completing my articling at a local accounting firm, I spent some time working in industry as a controller of a logging company. Subsequently, I joined Derek L. Chase & Associates Ltd. in 2017 and began working in the insolvency field. In June 2020 I completed my studies and was granted a license by the Federal Government to be a Licensed Insolvency Trustee.




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