Not completely surprisingly, Covid-19 has created increased financial challenges for many Canadian companies and statistics show that they are increasingly seeking creditor protection in the hope of being able to weather the storm.
Even with all of the government supports and assistance that were quickly put into place in March and April 2020, according to statistics recently released by the Office of the Superintendent of Bankruptcy, twenty-seven proceedings under the Companies Creditors Arrangement Act (“CCAA“) were filed in Canada between April and June 2020. The CCAA provides creditor protection for insolvent companies who have more than $5M in debt so that they can seek to restructure their affairs and avoid liquidation. By way of comparison to show the increase, in the twelve months ending June 2019, twenty-nine proceedings under the CCAA were filed. Whereas, in the twelve months ending June 2020, fifty-nine proceedings for creditor protection under the CCAA were filed in Canada, which is more than double the number from the preceding year.
In BC, the first six months of 2020 saw six filings under the CCAA and the twelve months ended June 2020 saw nine filings under the CCAA in total. This is a significant increase from the twelve months ended June 2019, which saw only four CCAA filings in BC in total.
It remains to be seen if this trend will continue. Statistics are not yet available for July 2020 from the Office of the Superintendent of Bankruptcy but industry reports and news certainly seem to indicate a continued uptick in companies seeking creditor protection.
If your business is experiencing insolvency issues, a consultation with an experienced insolvency lawyer at an early juncture can really help.