Canadian credit problems continue to emerge, conflicting with the narrative of improvement. Office of the Superintendent of Bankruptcy Canada (OSB) data shows insolvency filings climbed in June. The month marked the sixth straight year of growth, and the second-most filings on record.
What Are Insolvencies?
Just so we’re all on the same page, let’s talk about what insolvencies are and are not. They’re formal filings for credit relief made with the OSB, with the help of a Licensed Insolvency Trustee (LIT). The data includes both businesses and consumers, covering bankruptcies and consumer proposals. The option pursued depends on the amount of debt, assets at stake, and how far the borrower falls behind.
Insolvencies are often thought to be a sign of a worsening economy, but that’s not necessarily the case. Filings are made after years of accumulating debt, juggling repayment strategies, and missing payments. They’re known in finance as a lagging indicator, revealing what’s already happened. Growth in filings is validating pressure that was already present and likely dismissed.
Interpreting what the data means is tricky, but it’s best viewed in context. That means the trend is more important than any single datapoint. Even though it’s a lagging indicator, an eroding trend can still get worse. More importantly, it reinforces the context of other data points that may present a mixed picture of where the economy is.
Canadian Insolvencies Just Had The Second Biggest Month On Record
Total Canadian insolvency filings in June.
Source: OSB; Better Dwelling.
Insolvency filings climbed to 13,254 in June, up 11.5% (+1.4k) from last year and more than double (+100.8%) since 2020. This marks the sixth straight year of growth and the second-biggest June ever recorded. Only June 2009 came in larger, and nothing else has even been close.
Canadian Insolvency Filings Are Having One of The Biggest Years Ever
The 12-month sum of Canadian insolvency filings ending in June.
Source: OSB; Better Dwelling.
The surge isn’t just a monthly anomaly either—the growth in filings has been consistent over the past year. There were 150,505 filings in the 12 months ending in June, up 5.3% (+7.6k) from a year prior. It was also the second-most reported by this measure for the month, but a lot closer—just 0.4% (670) filings under the record in 2010. The difference here is that the 12-month trend still hasn’t peaked, whereas it had already begun to cool back then.
As stated before, these filings validate the economic pressure silently building—it doesn’t necessarily mean further erosion is in the pipeline. However, until one sees those numbers move past peak, the credit industry is still discovering how much risk actually exists. More importantly, they stand in stark contrast with the better-than-expected data that policymakers are touting—Data points that often reveal accounting skews more than signs of improvement.
