Insolvency statistics for May show a rise from April but are down from a year ago, when the Bank of Canada had yet to start lowering interest rates.
The 12,395 insolvencies in May was up 2.3 per cent from April, while down 2.6 per cent from May last year, according to data released Tuesday by the Office of the Superintendent of Bankruptcy.
Consumer insolvencies make up the bulk of filings at 12,004, including 2,631 bankruptcies and 9,373 proposals, while business insolvencies in May amounted to 391, including 301 bankruptcies and 90 proposals.
Canadian borrowers have seen some financial relief compared with May last year as it was the last time interest rates were at five per cent. The Bank of Canada started a series of reductions to bring its benchmark rate to 2.75 per cent this past March.
But wider economic pressures are still weighing, said André Bolduc, chair of Canadian Association of Insolvency and Restructuring Professionals, in a statement.
“Although recent interest rate cuts and subsequent pauses may have offered some initial relief, many households are still grappling with persistent high living costs, stagnant incomes, and debt accumulated during a period of steep borrowing rates.”
The number of consumer insolvency filings for the first five months of the year is 7.6 per cent higher than in the four years before the pandemic, pointing to the elevated stress, he said.
“These figures indicate a new baseline of insolvency filings and financial distress in Canada."
The Office of the Superintendent of Bankruptcy noted that for the 12-month period running to the end of May, consumers insolvencies were up five per cent from the previous year.
Business insolvencies, however, were down 13.3 per cent from a year earlier, after a spike in filings at the start of 2024 when pandemic-related business loans from the federal government came due.
The office notes that businesses in accommodation and food services, arts, entertainment and recreation — some of the most pandemic-affected sectors, saw the biggest decreases this past year compared with a year earlier, while filings in utilities, agriculture, forestry and health care areas saw the biggest increases.
And while business filings show a reduction from the previous year, May's filings are still 29 per cent above the baseline between May 2016 and December 2019, said Bolduc.
“Business insolvency levels remain elevated compared to pre-pandemic norms,” he said.
“This ongoing trend reflects the lasting impact of economic disruptions, inflationary pressures, and evolving uncertainties for Canadian businesses."
This report by The Canadian Press was first published July 8, 2025.
The Canadian Press
