Personal and corporate bankruptcies in Alberta jump significantly in 2019

A slowing economy has led to Canada'sfirst year-to-year increase in business insolvencies in almost two decades and Alberta is among the hardest hit.

New numbers from the Canadian Association of Insolvency and Restructuring Professionals (CAIRP) show that the province is one of only three to experience a double-digit increase in the percentage of businesses that filed for bankruptcy in 2019.

Comparing the past 12 months to September 2019 with the same period last year, there has been double-digit increases in business filings in Newfoundland(71per cent), British Columbia (23per cent) and Alberta (10 per cent).

'In for the long haul'

"I don't think it should be shocking at all. We continue to have a struggling economy," said CAIRP board memberDavid Lewis, based in Edmonton.

But, he says, the statistics don't necessarily tell the full story.

"A lot of companies just shut their doors and we don't ever find out," he said. "You look at your local restaurants that are open and then they just shut down and don't file for bankruptcy."

Lewis says struggles in the service, transportation and oil and gas industries are big contributors to the increase.

"Without a major change in what Alberta's main industry isbeing oil and gaseither through pipeline and price increases, or price increases and accessibility to other markets, we're going to be in for the long haul," he said.

Personal insolvencies on the rise

Lewis says the impacts of Alberta businesses going under is being felt on a personal level, too.

Albertans filing for personal bankruptcy in 2019 is up by more than 15 per cent compared with 2018.

"What you end up seeing is that there's always that lag," he said.

"You've had a major employer lay people off but they'd have anywhere between three to nine months of severance payments or payouts, and eventually that catches up to people."

High personal debt is playing a role, too.

"People were making, let's say, $150,000 a year, and now because you've lost overtime, and wages have gone down in some of these industries, they're now only making $100,000 but they're still living up to a $150,000 pace," he said.

And with high debt loads and stagnation, or shrinkage, of the market, Lewis says it's become increasingly hard to get out of the hole.

"Without getting more money inthe door and typically getting less, how do you manage that debt load?" he said.

And, when it comes to economic recovery, Lewis says there isn't much traction here in Alberta.

"We're still seeing lots of people struggle," he said.

As anexample, he pointed to Fort McMurray.

"You look at the average worker who was there and alot of those people were doing 10 days on,three days off, and then all of a sudden they were banking a bunch of overtime," he said.

"Now,a lot of it is, 'you're going to work but you're not working a bunch of overtime, it's just straight hours.'So that shrinks considerably the amount of money people are making."

Counselling requests jump

The Calgary Counselling Centre is expecting to hit a record number of requests for help by the time this year wraps up.

The organization's CEO Robbie Babins-Wagner says they see a huge influx during tough economic times. During the first four years after the recession hit, she says their numbers increased by 25 per cent.

"If we estimate what that increase will be to the end of 2019, it will be around a 40 per cent increase in requests for service. That's really striking in the sense of giving the picture of need out there," Babins-Wagner said.

By the end of the year the centre expects to top 10,000 requests for help.

Insolvenciesby the numbers

Canada

• 133,923consumer insolvencies were filed for the 12-month period to September 2019 compared with 123,391 for the same period a year earlier an increase of 8.5%.
• 3,719 business insolvencies were filed for the 12-month period to September 2019 compared with 3,571 for the same period a year earlier an increase of 4.1%.

Alberta

• 16,181consumer insolvencies were filed for the 12-month period to September 2019 compared with 14,045 forthe same period a year earlier an increase of15.2%.
• 222 business insolvencies were filed for the 12-month period to September 2019 compared with 202 for the same period a year earlier an increase of 9.9%.

Calgary

• 5,298 consumer insolvencies were filed for the 12-month period to September 2019 compared with 4,789 for the same period a year earlier an increase of 10.6%.
• 84 business insolvencies were filed for the 12-month period to September 2019 compared with 82 for the same period a year earlier an increase of 2.4%.