Insolvencies up sharply in Energy-Producing Provinces After Months of Job Losses in the Energy Sector
TORONTO, May 10, 2016 /CNW/ - Consumer insolvencies have jumped sharply in provinces affected by the energy sector downturn and that number appears poised to keep rising, according to the Canadian Association of Insolvency and Restructuring Professionals (CAIRP).
Bankruptcies and consumer proposals in Alberta rose by 24.6 per cent between February 2015 and February 2016, as reported by the Office of the Superintendent of Bankruptcy (OSB). That was after only a modest increase in the same period a year earlier of 2.8 per cent.
Similar increases were also recorded in Saskatchewan (18.2%) and Newfoundland and Labrador (22%), which not only has its own oil and gas industry but is home to many workers who travel to the western provinces.
"It's not surprising that Alberta, Newfoundland and Labrador, and Saskatchewan all have increasing numbers of filings as those provinces are all suffering from the decline in oil and gas prices," said Ian Schofield, CAIRP Board Secretary and a Saskatchewan Licensed Insolvency Trustee.
"We are only just now getting the statistics for February and certainly my experience here in South Saskatchewan is that we have been steadily getting busier since January."
Canada's energy sector employed about 300,000 workers in 2014, according to Natural Resources Canada. But the petroleum industry has lost an estimated 40,000 jobs over the past two years, and such massive cuts inevitably leave some laid-off workers without the means to make monthly payments. When an industry loses jobs in an economy that doesn't have a lot of diversity, insolvencies rise.
"I have found over the past thirty plus years that even if the economy starts turning around insolvency filings generally increase for some considerable time as individuals clear up the debt 'hangover' they still have from having lost their previous jobs," said Mr. Schofield.
"I think it's going to get significantly worse before it gets better."
While rates in other provinces remained relatively low – even declining in Ontario by 1.3 per cent from February 2015 to February 2016 – the impact of the oil price downturn has been dramatic in provinces where oil and gas are produced.
"CAIRP's message to those who find themselves in serious financial difficulty due to the downturn, is that their first step should be to visit a Licensed Insolvency Trustee to get thorough professional advice," said CAIRP President and Chief Operating Officer Mark Yakabuski.
"Most of our members are Licensed Insolvency Trustees (LIT), and as such are the only professionals licensed by the OSB to administer insolvency proceedings. They are the only professionals who can arrange for a stay on most creditor actions, and can show consumers all of their options."
CAIRP is the national association that represents nearly 1,500 Licensed Insolvency Trustees and associates. CAIRP is committed to providing consumers with better information about the options offered by Licensed Insolvency Trustees to assist consumers and businesses when they are insolvent, and to clearly distinguish our members from unlicensed service providers.
Requests for interviews with CAIRP spokespersons can be arranged via the media contact below.
SOURCE Canadian Association of Insolvency and Restructuring Professionals (CAIRP)
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For further information: Andrew Flynn, Communications Manager, Canadian Association of Insolvency and Restructuring Professionals, 416-204-3242, ext. 3563, firstname.lastname@example.org