Albertans still feeling financial pain, insolvency statistics show

Insolvencies up 30 per cent in central Alberta in first quarter of 2019

The number of insolvencies jumped 30 per cent in the Red Deer region in the first three months of the year compared with 2018.

Insolvency numbers jumped 15 per cent provincewide, and just a year ago, the trend was moving in the right direction.

Alberta’s insolvency figures are bleaker than the nation’s as a whole, where such cases were up six per cent in the first quarter.

MNP senior vice-president and insolvency trustee Donna Carson said last year’s numbers likely improved because workers laid off earlier in the slump were finding jobs.

“Insolvencies did slow down a bit,” she said, adding this region was doing better than most of the province.

“Now, this year, the numbers have increased to where they were a couple of years ago.”

In central Alberta, there were 263 bankruptcies or debt repayment proposals through March compared with 204 last year, according to statistics released this week by the Office of the Superintendent of Bankruptcy Canada.

Partly driving the numbers are small business owners who weathered the downturn for several years, but have run out of options.

“We are seeing an increase in the owners and directors of some of these small businesses reaching out to us as what to do,” said Carson.

“That’s probably the most common theme, I would say, in central Alberta.”

The duration of the downturn has been something new for businesses and employees to contend with.

“I’ve been doing this for 29 years, and it is definitely a prolonged increase in insolvencies as compared to any other (period) that I’ve ever seen.”

ATB Financial says in a report released on Thursday that Alberta will continue to face challenges this year with growth forecast at 0.07 per cent and 1.6 per cent in 2020.

Job creation is expected to be “slow if not negative” and retail sales “weak.” Manufacturing started the year off strong and projected to perform relatively well and the population is likely to increase.

“Despite all the headwinds hampering Alberta’s economic progress, it looks like we will avoid slipping back into recession,” said ATB chief economist Todd Hirsch. “With GDP growth of just 0.07 per cent, it is going to feel slow in our province.”

Carson said those involved in insolvency talk often with others in the field, and have heard from employment lawyers that many workers are still being laid off.

If there is a bright spot, it is that central Albertans are mending their finances through debt repayment proposals, rather than taking the more drastic step of declaring bankruptcy.

In central Alberta, the number of bankruptcies dropped about four per cent to 76 from 79 in the first quarter. The number of debt repayment proposals jumped by nearly 50 per cent to 187 from 125.

Alberta-wide, insolvencies were up 15.2 per cent — 3,934 from 3,416 — in the first quarter compared with a year earlier. Bankruptices were up about 16 per cent to 1,385 and proposals were up 15 per cent to 2,549.

Since 2013, Alberta has had a higher percentage of debt repayment proposals than the national average.

“In general, I would say it’s because (people say) I am working, but do not have enough to go around. So, I am able to restructure, whereas maybe in some other provinces, it’s not quite the same story.

“We have had a larger percentage of proposals for the past four or five years.”

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