Canada’s economy is experiencing renewed intensity, marked by regional variations, shifting creditor behaviour, and larger, more complex files. Lawyers on the front lines say the era of pandemic-era patience is waning, and debtors who delay risk losing valuable options.
Robyn Gurofsky, co-leader of the insolvency and restructuring group at Fasken Martineau DuMoulin LLP, describes the last year as one of steady acceleration in insolvency activity.
“While there may not be an increased level of filings since 2024, we’ve definitely seen an uptick,” she says, noting that “activity comes in waves but is becoming busier.”
In British Columbia, real estate continues to dominate insolvencies, along with mining and other resource-based entities. Alberta faces renewed oil and gas insolvencies involving companies that previously had acquired distressed assets, as well as insolvencies in the agricultural space. She adds that Ontario and Quebec’s insolvency cases span the real estate, retail, manufacturing, and construction industries.
During the COVID-19 pandemic, “after the initial shock of lockdowns, bankruptcies and insolvencies slowed down,” Gurofsky says. “Banks didn’t want to put people out of work, plus there was government support, employee programs and subsidies.” That support has now receded, leaving businesses struggling to repay loans amid broader uncertainty.
Gurofsky notes that lender behaviour has also changed. She says that patience persists in some situations, but there are more cases of creditors willing to use the legal tools governing insolvencies or cut back on their lending. Agricultural lending, in particular, appears to have grown more cautious, with some banks looking to withdraw from the sector entirely.
Restructuring outcomes are showing evolution. “We’re seeing quite a few going-concern sales,” she says, alongside hybrid models where shells are retained for tax or public listing value. Tools like reverse vesting orders continue to be popular.
In addition, creditor-driven filings under the Companies Creditors’ Arrangement Act (CCAA) are on the rise, and there are even cases – one now before the Alberta Court of Appeal – where investors are driving the CCAA process.
Gurofsky’s advice is straightforward: “The earlier you are in touch with your creditors, the better. If you wait until you can’t make your next payroll, your optionality becomes extremely limited.”
Hugo Babos-Marchand, practice lead for litigation and dispute resolution in Quebec for McCarthy Tétrault LLP, describes relative stability in overall volumes of insolvencies, yet escalation in the scale of the debt involved.
Data from the federal Office of the Superintendent of Bankruptcy shows commercial bankruptcies declining by nearly nine per cent year-over-year, with CCAA proceedings holding steady. But the companies filing today are larger, Babos-Marchand says. “We are dealing more frequently with enterprises carrying indebtedness in the hundreds of millions, which was not necessarily the case in previous years.”
Large-scale proceedings such as Pride Group in Ontario, one of Canada’s largest trucking and leasing companies, and Lion Electric, an electric bus and truck manufacturer based in Quebec, reflect this trend. Pride had racked up $630 million in debt, while Lion Electric’s debt stood at $411 million when it entered restructuring proceedings in late 2024.
A marked shift in creditor conduct accompanies the growth in file size. “Lenders are far less patient than they were during the pandemic,” Babos-Marchand observes. Creditor-initiated CCAA filings are increasingly common, blurring the lines between traditional debtor-driven applications and BIA receiverships.
Babos-Marchand stresses that lenders, governmental entities, and institutional players are not eager to prop up companies indefinitely. Support only comes when shareholders and management show commitment, which may include new equity.
This contrasts with the relative patience during COVID-19: “Back then, government subsidies and creditor forbearance suppressed activity and propped up zombie companies. That temporary overlay is gone.”
Babos-Marchand points out that the full impact of the US tariffs on Canadian businesses is yet to be seen. “For the moment, tariffs are rarely seen as the only cause of financial difficulties, but this may change.”
His advice echoes that of other insolvency practitioners: Early engagement and transparent reporting can facilitate informal restructurings that never appear on the public record. “Being proactive is essential, and waiting until liquidity is exhausted may foreclose restructuring altogether.”
Natasha MacParland, a partner in the insolvency and restructuring practice at Davies Ward Phillips & Vineberg LLP, agrees that creditor assertiveness defines the current cycle.
“We are seeing a steady increase in court-supervised restructurings, particularly under the CCAA, and receivership activity is also up,” she says. It has been quieter in sectors such as mining, but manufacturing, retail, real estate/construction, and segments of the auto supply chain are showing vulnerability.
The most striking development, MacParland explains, is the rise in creditor-initiated CCAA filings. “Historically, we drew a clear line between voluntary debtor-driven CCAAs and involuntary BIA receiverships. That distinction is breaking down.” The overall trend, she notes, is a turn to more creditor-driven outcomes: “Creditors are driving results, not waiting for debtors to act.”
Using the CCAA as an enforcement tool, secured creditors can preserve going-concern value while leveraging procedural advantages like stays, debtor-in-possession financing, and binding dissenters. For lenders, she says, this hybrid resembles a receivership but with a broader scope.
Sector-specific pressures vary, MacParland says: Retail faces increased costs and shifting consumer patterns, tariffs and input costs squeeze manufacturing, and construction projects are running short of liquidity. Two important sectors, steel and automotive, remain on watch as the impact of tariffs has likely not been fully realized.
MacParland, too, points out that pandemic-era patience has waned. “Lenders are back to insisting on actionable plans.”
For distressed companies, MacParland agrees on the importance of debtors acting early and taking advantage of tools outside of a court-led restructuring. “Many of the most effective restructurings never appear in court because they’re resolved early and consensually.”
MacParland also points to technology such as artificial intelligence as a potential game-changer in dealing with insolvencies and bankruptcies. “Insolvency is data-rich, and AI could be used to more efficiently streamline the technical side of insolvency proceedings, including, for example, claims processes.”
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Marc Wasserman, partner at Osler, Hoskin & Harcourt LLP, notes the role of receiverships in the insolvency process, especially in real estate. “We’re definitely seeing more receiverships here,” he says, adding that distressed property developers are especially vulnerable as loan values increasingly exceed underlying land values.
Recent receiverships have involved debt loads in the $30 million range – smaller in scale, but higher in volume, a trend that points to broadening financial stress.
Tariff uncertainty and fears for a weakening economy are contributing factors, with speculation about recessions prompting lenders to “clean house.”
That contrasts sharply with the pandemic-era “amend and extend” approach lenders often employed. With near-zero interest rates, creditors tolerated delays. “Now creditors are being more aggressive,” Wasserman says, with banks and other lenders knowing they will suffer a significant loss on the debt owed.
While real estate is among the hardest-hit sectors, Wasserman says the auto, steel, and lumber industries are closely watched, and some expect government relief if systemic risks emerge.
Wasserman emphasizes that restructuring options for debtors are not confined to court filings. Forbearances, equity injections, subordinated loans, or liability management exercises can provide alternatives. “It’s very bespoke. Every situation is unique,” he says.
Also, while court-led processes remain vital where enforcement is imminent or unsecured debt is overwhelming, the greatest value lawyers can provide their debtor clients often comes earlier.
“It’s like a divorce – if you know it’s coming, speak to a lawyer early so you don’t make mistakes you can’t undo.” With creditors adopting a more proactive stance, he warns, debtors have fewer opportunities to delay.
He says that with creditors adopting a more proactive stance, Canadian companies under stress have fewer opportunities to delay tough decisions. Early engagement with lenders and restructuring advisors may prove the difference between a controlled outcome and a costly descent into court-supervised proceedings.
Gabriel Lavery Lepage, a partner with the insolvency practice of Blake, Cassels & Graydon LLP in Montreal, notes that insolvencies remain elevated even as volumes have eased from last year’s peak.
Lavery Lepage points to statistics from the Office of the Superintendent of Bankruptcy that show that for the 12 months ending June 30, 2025, business insolvencies fell about 15 per cent compared with the same period in 2024. But “the numbers reflect a moderation from last year’s surge, not a return to the unusually quiet COVID years of 2020 and 2021.
“It’s a catch-up effect,” he says. “Creditors are under pressure themselves, with higher funding costs. They tend to be less patient.”
Higher interest rates are among the factors involved. “Capital structures that made sense in 2020 do not work today,” Lavery Lepage explains. “Companies with once-affordable debt now find it unsustainable, and creditors are acting sooner.”
He, too, notes that the files themselves are worth more, with debtors carrying greater obligations. Like other restructuring and insolvency lawyers, Lavery Lepage points to creditor-driven CCAAs as an emerging trend, offering lenders more control than debtor-initiated processes.
Tariffs, he adds, have yet to trigger a wave of filings but are being closely watched in industries such as auto parts, steel, and lumber. Lavery Lepage believes that government intervention will remain selective and points to Quebec’s lumber industry as one that might receive government support if pressure mounts.
Again, it’s crucial for companies facing insolvency to act sooner rather than later. “At the first signs of cash flow issues, engage advisers,” Lavery Lepage urges. Informal workouts, refinancing, and consensual restructurings can reduce costs and the stigma involved in insolvency. Out-of-court solutions preserve confidence, while formal filings should be a last resort. “The conventional wisdom is the earlier, the better – and it’s absolutely true.”
Across these perspectives, a consistent message emerges: Canadian insolvency practice is entering a new phase defined by creditor assertiveness, larger and more complex files, and fewer safety nets. Government support is selective, tariffs add uncertainty, and high interest rates erode once-sustainable capital structures. The key for businesses and their counsel is to act early, plan strategically, and recognize that waiting may leave no viable path forward.