INSOLVENT: Canadian business bankruptcies climb 10% in January

We reported last week that personal bankruptcies were on the rise in Canada, thanks to ballooning debt levels, rising interest rates, and a slowing economy (SEE: BANKRUPT: Canadian insolvency filings on the rise).

Now comes a new report that forecasts business insolvencies will climb in 2019 for the first time in 17 years.

According to the Canadian Association of Insolvency and Restructuring Professionals (CAIRP), the number of companies that filed for bankruptcy in January surged 10.1 percent compared to the previous year. The industries that were the hardest hit were real estate and construction.

“After 17 consecutive years of steady decline, business insolvencies in Canada have reached a plateau and will likely rise in 2019. Weaker exports, slowing job growth, tightening lending conditions, rising interest rates and consumer debt are all contributing factors,” says David Lewis, board member of the Canadian Association of Insolvency and Restructuring Professionals (CAIRP), the country’s national association of insolvency and restructuring professionals.

Here is a chart to show the correlation between insolvencies and interest rates:

Canada is in for a load of hurt after living large since the financial crisis.

It was said before, and it will be said again: Canadians must have taken financial advice from Prime Minister Justin Trudeau when he said budgets balance themselves.