Financially distressed businesses can file for a bankruptcy or a proposal, which together is classified as insolvency.
A business that enters a formal process, or against whom an order has been made to sign over their assets, as they cannot meet their financial obligations. This will be recorded on the debtor’s credit file, making it difficult to obtain credit in the future.
An insolvent business offers to repay, in whole or in part, the amount owing to its creditors, often for a reduced payment plan.
- The number of business insolvencies in Peel Region increased to 77 cases in 2020.
- The increase in the total number of business insolvencies was a result of higher cases of both business bankruptcies and commercial proposals.
- Relative to 2019, net liabilities associated with business insolvencies also increased in 2020.
- The increase in insolvencies occurred given the onset of the COVID-19 pandemic and associated business closures in 2020.
- The reinstatement of COVID-19 pandemic restrictions in late 2020 will likely contribute to higher business insolvencies and associated net liabilities in Peel in 2021.
The total number of business insolvencies recorded in Peel increased to 77 cases in 2020, compared to 70 cases recorded in 2019.
Higher number of cases for both business bankruptcies (+4.1 per cent) and commercial proposals (+23.8 per cent) contributed to the increase in business insolvencies.
The reinstatement of COVID-19 response measures and associated business closures are likely to lead to further increases in business insolvency cases in 2021.
The availability of federal and provincial government supports to impacted businesses, will likely dampen the impact on business insolvencies in Peel.
The downward trend in business bankruptcies in Peel Region ended in 2020 as the number of business bankruptcies increased from 49 cases recorded in 2019 to 51 cases in 2020.
The reinstatement of COVID-19 restrictions is likely to lead to further increases in business bankruptcies in Peel in upcoming quarters as closure procedures are completed and reported.
The number of commercial proposals increased by 23.8 per cent to 26 cases in 2020 from 18 cases in 2019.
Net Liability of Business Insolvencies
Relative to 2019, total net liabilities of business insolvencies increased by 10.7 per cent to $143.1 million.
Net liabilities of insolvencies per case decreased by 0.6 per cent in 2020.