Chair and honourable members, thank you for the invitation to appear as a witness today.

I will deliver my remarks in English in order to avoid any technical difficulties.

Today, I will provide a brief overview of the insolvency system in Canada and I'll touch on some information and data that I thought might be of interest to you in relation to the current study. Then I will be happy to answer any questions you have, in the language of your choice.

Before I begin, I'd like to share an important perspective regarding policy challenges and insolvency.

Policy challenges generally don't originate in insolvency laws. They have a light shone on them via an insolvency, but the problems almost always lie elsewhere and should be addressed at their root. Trying to fix problems in insolvency is ineffective for the core problem and can upset the delicate balance that is necessary for an effective insolvency system and/or can negatively impact credit in general. Trying to fix problems in insolvency is like trying to save a plant by addressing the flowers only. If you do that, both the flowers and the plant will die.

Turning briefly to an overview of the insolvency system and my office, for context purposes, a well functioning insolvency system is a key pillar of the economy. It helps promote investment and creditor confidence in the Canadian marketplace and allows honest but unfortunate debtors a fresh financial start.

As superintendent, which is a Governor in Council appointee, I have statutory duties and authorities that I carry out at arm's length to the government, which help to ensure that the Canadian insolvency system continues to operate as intended. My office is responsible for overseeing all aspects of the Bankruptcy and Insolvency Act, as well as certain aspects of the Companies' Creditors Arrangement Act. I license and regulate the insolvency profession, ensure an efficient and effective regulatory framework, supervise stakeholder compliance, and maintain public records and statistics.

I also have directive-making power that enables me to provide additional direction on the legal requirements of the BIA. My office has the lead on regulatory changes, while the Minister of Industry has responsibility for insolvency legislation. We work closely with the department to try ensure that operational realities are considered in any policy changes.

The OSB, as a vote net organization, is almost entirely funded by stakeholders, whereby levies and fees cover almost all of our direct and indirect costs, with only a small appropriation. In addition to the OSB, key players in the insolvency system include licensed insolvency trustees, debtors, creditors and provincial courts. Stakeholders in the insolvency system have rights and responsibilities and can be subject to consequences if they fail to fulfill their duties.

I want to note that there has been a lot of attention paid to insolvency trends and the increased number of filings of late. To put that in context, we have not yet seen consumer insolvency filings reach the number we saw prior to the pandemic. In 2019, there were just over 137,000 consumer insolvency filings. The numbers dropped significantly during the pandemic lockdowns and have only more recently been rising. In 2023, for example, there were just over 123,000 consumer insolvency filings.

It is worth noting that we saw the highest number of filings in 2009 during the recession, when we saw over 151,000 consumer insolvency filings, with a note that Canada's population has grown since then.

It is also worth mentioning that in 2023, almost 79% of those filings were consumer proposals, which is an option that allows debtors to retain their assets and pay an amount agreed upon by their creditors, usually over a period of time. Consumer bankruptcies are only occurring in about 21% of the cases and are more likely to be an option for debtors who have little or no ability to repay the amounts owing.

On the business insolvency side, we have seen filings increase steadily since the lows in 2021 and 2022. In 2023, there were 4,810 business filings, which is the highest number since 2011, but it's still not as high as the filing numbers seen in 2008, 2009 and 2010, following the recession.

My office's role with respect to credit card practices and regulations is limited, as an insolvency occurs at the end of the lending cycle and only a small fraction of credit card holders in Canada file an insolvency each year. However, we do collect insolvency data and I thought I could share a few relevant data points.

Debtors have to report all liabilities on their statement of affairs at the start of any insolvency, including any credit card debt. In 2023, 87% of insolvent consumers reported at least one credit card in their liability, with an average amount owing of just under $18,000. This is pretty comparable to 2019, prior to the pandemic, when we saw 89% with one credit card, with debt averaging close to $20,000.

On the reasons for financial difficulty, this is an open text field, so it's not perfect for providing data, but what we can see is that in 2023, around 0.79% of those filing bankruptcies and proposals self-reported that credit cards were the reason for their financial difficulties, which is about the same as in 2019, when it was 0.95%.

On bankruptcies, we also collect the licensed insolvency trustees' perspective on the cause of bankruptcy at the end of the bankruptcy. In that case, overextension of credit was reported as a cause of bankruptcy in 11.68% of consumer bankruptcies.

On demographics, consumers aged 35 to 49 made up 37.5% of insolvency filings in 2023, which is about the same as in 2019. This is the largest percentage share of all age groups.

I'll conclude by highlighting two last things.

First, consumer debtors in Canada are required to participate in two insolvency counselling sessions in accordance with standards established by my office. These sessions are supported by an online curriculum and are designed to promote debtor rehabilitation in support of a fresh financial start. One of the modules deals with the responsible use of credit and covers topics like borrowing and managing the use of credit and debt.

Finally, my office has been working hard in collaboration with partners to provide helpful information to debtors so that they can make the best choices to deal with their debt. We publish an online “Consumed by debt?” brochure in 13 languages. We have an online debt solutions portal and an AI-empowered debt questionnaire. We have issued consumer alerts and we have been undertaking multiple social media campaigns to get the word out to consumers.

This concludes my opening remarks. Thank you once again for the invitation to be here today.