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Bankruptcy trend starts subsiding

OTTAWA, Ont. -- The number of Canadian business bankruptcies appears to be coming back under control after surging...


OTTAWA, Ont. — The number of Canadian business bankruptcies appears to be coming back under control after surging to near record levels in the fourth quarter of 2001.

According to Industry Canada, the total number of failures increased 26 per cent between the third and fourth quarters of 2001, from 2,148 to 2,709. More recently the total has declined slightly to 2,660 in the first quarter of 2002.

Bankruptcies increased 9.4 per cent between the fourth quarter of 2000 and the fourth quarter of 2001 and declined 4.6 per cent from the first quarter of 2001 to the first quarter of 2002.

The fourth quarter of 2001 saw the level of business liabilities reach $2 billion, an increase of 167 per cent from the third quarter. This is the highest level of liabilities since 1992.

The recent quarter-to-quarter volatility in business liabilities appears to have subsided in the last six months. From the fourth quarter of 2001 to the first quarter of 2002, there was a modest 7.8 per cent decline to $1.8 billion.

However, year-over-year changes remain large, with a 140 per cent increase between the fourth quarters of 2000 and 2001 and a 64 per cent increase between the first quarters of 2001 and 2002.


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