Volume of insolvencies
In 2020 a total of 99,244 insolvencies were filed with the Office of the Superintendent of Bankruptcy (OSB) representing a 29.5% decrease from 2019, the largest annual decrease ever recorded. The decrease coincided with the onset of the COVID-19 pandemic and emergency responses. Consumer insolvencies decreased from 137,178 to 96,458 filings, while business insolvencies decreased from 3,680 to 2,786 filings. The share of proposals among consumer insolvency filings grew by 5.6% from 60.3% in 2019 to 65.9% in 2020.
The COVID-19 pandemic has negatively impacted the global economy. In 2020 the Canadian real Gross Domestic Product (GDP) fell by 5.4%Footnote 1, the largest decline since 1961. While the unemployment rate increased significantly from 5.7% in 2019 to 9.5% in 2020, the participation rate fell from 65.6% to 64.1%Footnote 2. According to Statistics Canada the household debt service ratio fell from 15.0% in 2019 to 13.4% in 2020Footnote 3. As a result of COVID-19, the Bank of Canada twice dropped its target for the overnight rate by 0.5% in March 2020 to its lower limit of 0.25%Footnote 4. Government support and regulatory changes for lenders allowed deferrals for mortgages, credit cards and other debt payments. Additionally, the Government of Canada initiated various financial supports such as the Canada Emergency Response Benefit (CERB) for individuals and Canada Emergency Wage Subsidy (CEWS) for businesses.
Demographics at a glance
The decline in volume of consumer insolvencies was fairly uniform across age and gender groups. The percentage share of insolvency filings by individuals aged 18 to 34 increased from 23.4% in 2019 to 24.2% in 2020. For individuals aged 35 to 49, it decreased from 37.6% to 37.1%. For individuals aged 50 to 64, it decreased from 27.2% to 26.8%. For individuals aged 65 and over, it increased from 11.7% to 11.9%. The share of insolvency filings by women increased slightly from 47.9% to 48.2%, correspondingly filings by men decreased from 52.1% to 51.8%.
On July 1, 2020 Statistics Canada reported a population estimate of 38,005,238 for Canada, an increase of 411,854 from the previous year representing a growth rate of 1.1%, down from 1.43% in 2019. This is the first time the growth rate has declined since 2015. The proportion of seniors aged 65 and older continues to grow from 17.5% in 2019 to 18% in 2020. Other age groups experienced minimal changes in 2020. The proportion of women and men in the Canadian population remained unchanged at 50.3% and 49.7% respectivelyFootnote 5.
Regions at a glance
From 2019 to 2020, all provinces experienced a decrease in the number of consumer insolvencies. The provinces with the largest decreases were:
- Quebec, 16,182 fewer filings (-37.8%)
- Ontario, 10,860 fewer filings (-24.2%)
- Alberta, 3,586 fewer filings (-21.5%)
In Quebec, the economic regions of Montreal and Montérégie saw the largest decreases, with 3,180 and 3,156 fewer filings respectively. In Ontario, the economic region of Toronto had the largest decrease with 3,800 fewer filings. Alberta saw its largest decreases in the economic regions of Calgary and Edmonton with 1,366 and 1,189 fewer filings respectively.
For business insolvencies, all provinces experienced a decrease except British Columbia, which remained stable compared to 2019. The three provinces with the largest decreases were:
- Quebec, 527 fewer filings (-24.8%)
- Ontario, 143 fewer filings (-15.9%)
- Alberta, 63 fewer filings (-28.3%)
2020 has been a challenging year for all regions across Canada as a result of emergency measures introduced to combat the spread of the COVID-19 pandemic. In 2020, the Canadian unemployment rate increased by 3.8%. The rate increased in all provinces. Alberta experienced the highest increase from 7.0% to 11.4%. British Columbia saw the second highest increase from 4.7% to 8.9%. The Atlantic provinces registered the smallest increase in unemployment rateFootnote 2. Every province has experienced a decline in real GDP growth. Newfoundland and Labrador saw the greatest decline of -6.8%, followed by Alberta (-6.5%), Quebec (-5.7%), and Ontario (-5.6%)Footnote 6. In addition to various benefits provided by the federal government, provinces and territories have also implemented a variety of supports such as eviction moratoriums, rent freezes, etc. to help Canadians and businesses during the COVID-19 outbreak.
Industry at a glance
The total number of business insolvencies in 2020 decreased by 24.3% from 2019. The three sectors that registered the largest decrease in the number of insolvencies were:
- Construction (-346 filings)
- Manufacturing (-107 filings)
- Professional, Scientific and Technical Services (-99 filings)
Only four sectors registered an increase. They were:
- Arts, Entertainment and Recreation (+39 filings)
- Management of Companies and Enterprises (+12 filings)
- Educational Services (+6 filings)
- Public Administration (+3 filings)
The COVID-19 pandemic has negatively affected many Canadian businesses. In 2020, the three sectors with the highest decreases in GDP growth rate were:
- Arts, Entertainment and Recreation (-41.2%)
- Accommodation and Food Services (-33.4%)
- Transportation and Warehousing (-19.8%)
Despite difficult economic conditions, some sectors continued to grow. Agriculture, forestry, fishing and hunting grew by 4.7%; Finance and Insurance by 3.8%; and Real Estate and Rental and Leasing by 1.7%Footnote 7. To support the Canadian economy during the COVID-19 pandemic, the federal government has provided significant relief measures such as financial support, loans, and access to credit to businesses, including the sectors hardest hit by the pandemic Footnote 8.
- Tables 1–3
- Table 4
- Table 5
- Table 6
- Tables 7 and 8
- Tables 9–11