2024-03-22 01:45:09
Many business leaders must make difficult decisions due to their precarious financial situation. The number of bankruptcies increased sharply last year in Quebec, and this sad trend will continue in 2024.
“Entrepreneurs are really having difficulty making ends meet and finding solutions,” explained Louise Gagnon, vice-president of debt solutions at BDO Solutions.
In the last year, business bankruptcies have increased by nearly 50% in Quebec.
“Rent costs more, labor costs more, basic materials cost more. With inflation, people are cutting what is not essential,” explained the insolvency trustee.
At the BDO Debt Solutions office in Rimouski, calls from entrepreneurs at the end of their rope are more numerous than ever at the start of the year.
A record number of files in January
According to the Office of the Superintendent of Bankruptcy, a record was set in January 2024. A 129% increase in the number of insolvency files filed was observed in Canada compared to January 2023.
“The Superintendent of Bankruptcy has been keeping statistics for 36 years and in January 2024, it is the largest increase that has ever been recorded in terms of the volume of commercial insolvencies,” underlined the trustee.
The straw that broke the camel’s back for many entrepreneurs was the repayment of the COVID loan, required in January.
“Companies try to refinance, to obtain a loan, but often financial institutions refuse because the company is not solid enough or require a personal guarantee from the individual, which is heavy for the entrepreneur. already out of breath,” added Ms. Gagnon.
Some catching up to do
Since insolvency cases have become very rare during the pandemic, due in particular to financial support from the government, there is also a catch-up process underway.
“There were almost no bankruptcies in 2021-2022, so yes, there is a lot of catching up to do. So we don’t want to be alarmist, […] but it’s still the biggest increase in the last 36 years.”
Faced with this growing number of bankruptcies, the Canadian Federation of Independent Business (CFIB) considers that the government must act to stop the bleeding.
“When we look at payroll taxes in Quebec, it is 30% higher here than in the rest of Canada. We are the only province that does not even provide access to the reduced tax rate to the smallest businesses in the construction and services sectors. It might be time for the Quebec government to do something for our small businesses,” said François Vincent, vice-president of the Canadian Federation of Independent Business.
Currently, many companies cease operating without officially declaring bankruptcy. They are therefore not found in the statistics.
According to the experts interviewed, the alarming data recorded in recent months is therefore only the tip of the iceberg.
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