Now more than ever, Canadian businesses are\u00a0seeking protection from creditors.<\/p>\n
The number of large Canadian companies seeking protection from creditors hit its highest point in more than ten years during May and June, and the trend is only likely to continue as a result of COVID-19.<\/p>\n
Under the\u00a0Companies\u2019 Creditors Arrangement Act (CCAA), companies that owe at least $5 million can file for protection from their creditors to either restructure their business financially or supervise an orderly wind-down and sell assets to pay back those they owe money to. CCAA proceedings are typically used as a last resort for companies that have run out of options and time. Companies had to adapt quickly when the COVID-19 lockdown hit, yet businesses that were in strong health before the pandemic were generally able to do so. Unsurprisingly, the economic toll of COVID-19 has been\u00a0heaviest on companies with pre-existing problems.<\/p>\n
A record ten companies began CCAA proceedings in May, followed by another twelve in June.\u00a0The number fell back to four in July but that’s still above the 10-year average of about three per month. Many of these restructurings involve faceless numbered companies, but a slew of high-profile insolvencies and\u00a0bankruptcies in Canada have made headlines during the course of the pandemic, including Reitmans, Frank & Oak, Aldo, DavidsTea, Cirque Du Soleil, FlightHub, and several oil companies.<\/p>\n
COVID-19 is undoubtedly the catalyst for the sudden surge of proceedings, but many of the victims in question already had financial issues. CCAA\u00a0filings are generally driven by lenders saying \u201cenough is enough,\u201d causing the company to run to the\u00a0CCAA in favor of other even worse options.\u00a0If they do nothing at all, lenders often have the power to take drastic measures, such as locking an insolvent company\u00a0out of its premises or even seizing assets and inventory. Yet some observers have noted the phenomenon of \u201copportunistic\u201d filings by companies trying to blame unrelated problems on COVID-19. Retailers, real estate, and the energy sector have been particularly guilty of this, according to some experts consulted by CEO Magazine.<\/p>\n
Let\u2019s take real estate. Government initiatives intended to help pay rents to commercial landlords, along with bank programs allowing tens of thousands of Canadians to defer paying their mortgages, are set to expire in the coming months.<\/p>\n
There\u2019s certainly evidence that government bailouts are having their desired effect of keeping ordinary people solvent during the pandemic, but on the corporate side it\u2019s quite a different story.<\/p>\n","protected":false},"excerpt":{"rendered":"
Now more than ever, Canadian businesses are\u00a0seeking protection from creditors.<\/p>\n","protected":false},"author":21,"featured_media":27274,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1069,45],"tags":[529,3992,99,1385,3043,3990,3994,3993],"class_list":["post-27272","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-editors-choice","category-industry","tag-canada","tag-ccaa","tag-ceo","tag-ceo-northam","tag-cirque-du-soleil","tag-financial-storm","tag-frank-oak","tag-reitmans"],"_links":{"self":[{"href":"http:\/\/servidor-mxigen1.com\/ceona-antiguo\/wp-json\/wp\/v2\/posts\/27272","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/servidor-mxigen1.com\/ceona-antiguo\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/servidor-mxigen1.com\/ceona-antiguo\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/servidor-mxigen1.com\/ceona-antiguo\/wp-json\/wp\/v2\/users\/21"}],"replies":[{"embeddable":true,"href":"http:\/\/servidor-mxigen1.com\/ceona-antiguo\/wp-json\/wp\/v2\/comments?post=27272"}],"version-history":[{"count":3,"href":"http:\/\/servidor-mxigen1.com\/ceona-antiguo\/wp-json\/wp\/v2\/posts\/27272\/revisions"}],"predecessor-version":[{"id":27323,"href":"http:\/\/servidor-mxigen1.com\/ceona-antiguo\/wp-json\/wp\/v2\/posts\/27272\/revisions\/27323"}],"wp:featuredmedia":[{"embeddable":true,"href":"http:\/\/servidor-mxigen1.com\/ceona-antiguo\/wp-json\/wp\/v2\/media\/27274"}],"wp:attachment":[{"href":"http:\/\/servidor-mxigen1.com\/ceona-antiguo\/wp-json\/wp\/v2\/media?parent=27272"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/servidor-mxigen1.com\/ceona-antiguo\/wp-json\/wp\/v2\/categories?post=27272"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/servidor-mxigen1.com\/ceona-antiguo\/wp-json\/wp\/v2\/tags?post=27272"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}