Business bankruptcies in 2024
The year 2023 was particularly challenging for Canadian SMEs. The number of bankruptcies recorded in 2023 has risen by over 40% compared with 2022. Around 60% of these companies are based in Quebec.
It’s interesting to note that for every company that officially files for bankruptcy, at least three other companies also close, but without declaring bankruptcy. This percentage is even higher if we look solely at the number of companies going out of business.
One thing seems certain: experts predict that these percentages will continue to rise in 2024. However, the situation should improve towards the end of the year.
Impact of Covid-19
Business failure can have a variety of causes. In recent years, this has mainly been a consequence of Covid-19. Many companies went through difficult times during this period. Governments and creditors then decided to be more lenient. In particular, in relation to loans and debts. But the pandemic is over.
The situation gradually began to return to normal. Particularly since 2023. As a result, many companies had to pay their debts in full in 2023 and 2024. Hence the increased number of insolvencies. In fact, some specialists believe that this situation is entirely legitimate. That it’s not really alarming. It should improve and stabilize towards the end of 2024.
Other causes
However, there are other causes of business failure. Here are just a few examples:
- Cash flow problems
- Market saturation
- A lack of marketing strategy
- Changes in laws and standards
- Poor financial management
What are the consequences of corporate bankruptcy?
The bankruptcy of a single company can result in widespread damage, such as :
- Job loss for a large number of people: the company’s employees
- Falling supplier revenues, leading to possible bankruptcy as well
- A financial loss for shareholders and many others
What to do before declaring bankruptcy
Is declaring bankruptcy really the best solution for your business? Well, sometimes there are less definitive options. For example:
- The recovery plan
- Voluntary liquidation
- The concordant proposal
At Demers Beaulne Inc., we’ll help you find the best solution for your business. As a licensed insolvency trustee, we’ll support you every step of the way.
Conclusion
A large number of SMEs went bankrupt in 2023. Experts predict that this phenomenon will continue into 2024. In their view, the situation is perfectly normal. Is your company going through a difficult period financially? Bankruptcy may not be your only option.
We can offer you other interesting solutions. Contact us to find out more about our services.
