Don’t Believe the Hype – The Insolvency Community is Busy

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Although the number of Canadian corporate insolvencies decreased materially in 2025 we believe this is a result of the end of the Covid hangover and expiry of Government handouts in 2024. 2025 and YTD 2026 numbers are tracking ahead of pre-Covid numbers and in our discussions with special loan groups and the insolvency community they are busier than ever. Bank impaired loan and credit loss provisions are on the rise meaning we suspect our insolvency friends will continue to be burning the midnight oil.

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Key Takeaways this Month:

• Insolvency Numbers Are Down But Above Pre Covid Levels: Corporate insolvencies decreased by 23% in 2025 and continue to show signs of decline as of March 2026 (albeit at a slower pace). The reversal was primarily driven by sectors such as Hospitality/Food Services (-26% vs. 2024), Transportation (-30% vs. 2024) and Construction (-16% vs. 2024). The declining corporate insolvencies trend was prevalent across Canada, except for Alberta which experienced a 18% YoY increase in 2025.
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• Provisions for Impaired Loans and Credit Losses are Rising: Provisions for impaired loans are up 12% YoY while credit losses increased by 3.6% in the last quarter alone and continue to remain well above historical levels. The key sectors that appear to be experiencing weakness are residential real estate, agriculture, manufacturing and retail/wholesale trade.
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• Navigating The Next Phase: As credit conditions evolve, access to flexible capital is becoming increasingly critical and difficult. For businesses facing growth opportunities or need to transition out of traditional bank financing, Diamond Willow leverages its network of ~500 lenders to provide tailored solutions to navigate the next stage.

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ANNUAL CANADIAN CORPORATE INSOLVENCIES

Canadian Corporate Insolvencies decreased by 23% in 2025 but remain elevated vs pre-Covid levels

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MONTHLY CANADIAN CORPORATE INSOLVENCIES

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ANNUAL CORPORATE INSOLVENCIES, HIGHLIGHTED INDUSTRIES

The big driver of the reduction in the number of insolvencies were Covid-impacted industries like Hospitality/Food Services (-26% vs. 2024), Transportation (-30% vs. 2024) and Construction
(-16% vs. 2024).

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PROVINCIAL HIGHLIGHTS: YOY % CHANGE IN CORPORATE INSOLVENCIES

Alberta emerged as the outlier in 2025, with corporate insolvencies rising 19% YoY, though this momentum has since reversed in the latest TTM period. Meanwhile, Quebec and Ontario remain heavily overrepresented, accounting for 56% and 30% of insolvencies, respectively.

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CANADIAN BIG 6 GROSS IMPAIRED LOANS, SEGMENTED

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CANADIAN BIG 6 PROVISION FOR CREDIT LOSSES

Provision for credit losses increased by 3.6% QoQ and continue to remain elevated relative to pre-COVID levels. Credit stress is most pronounced in residential real estate (+24% YoY), but is also broadening into commercial portfolios, particularly across agriculture (+20% YoY), manufacturing (+15% YoY), and retail/wholesale (+5%YoY)

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DIAMOND WILLOW LENDER NETWORK

For businesses looking for capital to grow, acquire, or turnaround Diamond Willow leverages its network of~500 lenders and can help to identify the best path forward

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Source: Bank Earnings Report, Diamond Willow