Business Bankruptcies Hit Record Level In Second Quarter

A record number of businesses are filing for bankruptcy across Canada.

Canadian businesses large and small are seeking protection from creditors at a record rate due to the strains put on companies by the coronavirus pandemic. In the second quarter of this year (April to June), 27 firms were granted protection under the Companies’ Creditors Arrangement Act, a federal law that gives insolvent corporations that have debt of more than $5 million an opportunity to restructure and avoid liquidation. That is the most in any quarter since the global financial crisis of 2009, which is as far back as the data is available.

According to the Office of the Superintendent of Bankruptcy, May and June saw 10 and 12 orders granting protection, respectively, under the CCAA. The average since 2009 is three a month. Previously, the highest monthly total of bankruptcy claims was nine, recorded in December 2011.

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Retailers Reitmans Canada Ltd. and Aldo Group Inc., as well as cannabis firms Beleave Inc. and Green Growth Brands Inc. were among the companies that filed for bankruptcy during the second quarter. While the CCAA applies to larger companies, a similar trend appears to be underway among smaller Canadian businesses.