The Bankruptcy and Insolvency Act and the Companies’ Creditors Arrangement Act provide the legal framework for the resolution of insolvency of individuals and most businesses, through either a bankruptcy or proposal process, or a restructuring process.
While the COVID-19 pandemic and related containment measures caused a severe recession in 2020, the number of businesses undertaking insolvency proceedings declined significantly in 2020 and 2021, contrary to what could have reasonably been expected. This decline was due in part to the various support measures and business loan and liquidity programs put in place by governments. However, while the number of business insolvencies remained below pre-pandemic levels through most of 2021 and 2022, it has been on a rising trend since then. Higher input and borrowing costs and an expected decline in economic growth at a time when many businesses are more indebted due to the pandemic have led to renewed concerns of a rising number of business insolvencies.
This paper provides an overview of Canada’s business insolvency framework, as well as recent amendments and proposed changes to legislation. It also examines long term and short-term trends in the number of business insolvency filings, with a focus on developments since the onset of the COVID-19 pandemic.
Read the full text of the HillStudy: Business Insolvency: An Overview of Legislation and Recent Trends in Canada
By Michaël Lambert-Racine and Adriane Yong, Library of Parliament