In 2024, Canada recorded a staggering 375 insolvencies per day, marking a 15-year high in financial distress among businesses and consumers, according to new data from the Office of the Superintendent of Bankruptcy. Insolvencies—comprising both bankruptcies and proposals—rose by 12.1% compared to 2023, with business insolvencies soaring by 28.6%.
The hardest-hit sectors included construction, transportation and warehousing, and accommodation and food services, all of which struggled amid rising costs, supply chain disruptions, and fluctuating consumer demand.
Despite multiple interest rate cuts by the Bank of Canada, Canadians are entering 2025 with deep financial pessimism, says the Canadian Association of Insolvency and Restructuring Professionals (CAIRP).
“The rise in consumer insolvencies last year highlights the severity of financial pressures many Canadians are experiencing, exacerbated by rising living costs and economic instability,” said CAIRP Chair Andre Bolduc.
With the Bank of Canada’s benchmark rate lowered to 3% from its peak of 5%, some relief has been provided. However, for homeowners renewing mortgages in 2025, monthly payments will remain significantly higher than during their last term. Additionally, essential goods and everyday expenses continue to outpace wage growth, leaving many households financially strained.
The financial strain isn’t limited to consumers. Small- and medium-sized businesses are particularly vulnerable, as rising costs, trade uncertainty, and potential tariffs from the United States create an unpredictable business climate.
“Rising production costs, supply chain disruptions, reduced consumer demand, and overall uncertainty are making it increasingly difficult for Canadian businesses to maintain financial stability, particularly for those reliant on cross-border trade or already facing significant strain,” Bolduc added.
This uncertainty has been compounded by U.S. President Donald Trump’s threat of 25% tariffs on Canadian imports—a move that could severely impact trade-dependent businesses. A 30-day pause was granted after Prime Minister Justin Trudeau negotiated new border security commitments, but the potential for sweeping tariffs still looms large.
Insolvency filings in Q4 2024 surged by 5.2% year-over-year, totaling over 35,000 cases. Consumer insolvencies saw a 6.1% increase, while business insolvencies, though still high, declined by 12.4% in the final quarter.
With interest rate adjustments, trade tensions, and high inflation continuing to weigh on both consumers and businesses, 2025 is expected to remain a challenging year for Canada’s financial landscape. The key concern remains whether relief efforts—such as interest rate cuts—will be enough to counteract ongoing economic pressures and potential tariff impacts.