March 09, 2021
Canadian Lawyer reports that although filings for insolvencies in Canada in 2020 were the lowest they had been in the past 20 years, the effects the pandemic has had on business operations will still take a while to play out.
Head of Torys’ Corporate Restructuring and Advisory practice David Bish told the publication that even through the number of consumer filings, bankruptcy filings and proposal filings were relatively low—given the economic turbulence over the past year—there was a rise in filings under the Companies’ Creditors Arrangement Act and an increase in court-appointed receiverships.
David noted that while pandemic related government support for small businesses and individuals has played a key role in the decline of insolvency filings, government restrictions have still put businesses under severe financial pressure, with some being forced to permanently shut their doors.
“They literally just turned out the lights and they locked up and left,” David said.
David continued on to note that Toronto’s Prairie Girl bakery, which permanently shut in January, is an example of a business that struggled to keep afloat amid the government restrictions.
To find out more about the impact COVID-19 is having on organizations, listen to the Torys Business Brief podcast “The art of fixing broken businesses” where insolvency lawyers David Bish and Kyle Kashuba discuss how this current financial crisis is different from the 2008 recession, what principal challenges companies are facing, and what management can do to ease the pressure.