By Lynne Olver
TORONTO, Nov 11 (Reuters) - There will be a steady upward march in personal
and business bankruptcy filings in Canada as overspending and falling home
prices catch up with individuals and as a slowing economy hurts businesses,
experts in the field say.
"We're definitely seeing an increase (in calls), I think that people are
caught, they've been living on credit," said Linda Stern, vice president of
personal restructuring services at Deloitte & Touche Inc in Toronto.
Stern estimates her office is working on 30 percent more filings --
actual bankruptcies or proposals to pay off a portion of debt -- than at this
point last year.
"We're busy, every day we're getting many calls and e-mails" as people
explore their options, she said.
Her colleague, Rebecca McKinley, a trustee at Deloitte in Windsor,
Ontario, a manufacturing center a stone's throw from Detroit, said her office is
dealing with about 17 percent more bankruptcies than last year.
"In the past year I have seen more and more instances of people who
cannot afford their mortgages," while at the same time their house values have
dropped, McKinley said.
Canada's Office of the Superintendent of Bankruptcy said last week that
total bankruptcies in September jumped 28.4 percent from the same month a year
earlier. Individual bankruptcies were up nearly 30 percent nationwide, but
businesses also posted a 9 percent increase.
Economists at Bank of Montreal said this year-over-year surge in consumer
bankruptcies marks the fastest rise since the mid 1990s.
At Toronto-Dominion Bank, economists said the numbers suggest headwinds
for Canadian consumption at a time when the export side of the economy is
hurting.
"The channels of wealth are deteriorating and consumers are now looking
at smaller personal portfolios, not only due to stock market losses, but also
the unwind in housing prices," TD economic strategist Charmaine Buskas said in a
research note.
Since the end of September, some well-known retail businesses have sought
creditor protection after their U.S parents filed for bankruptcy protection.
They include electronics chain InterTAN Canada, which is the Canadian
subsidiary of Circuit City Stores Inc and operates almost 800 Canadian stores
and dealer outlets under the banner The Source, as well as the Canadian
subsidiary of home retailer Linens 'n Things.
On Canada's West Coast, where housing prices have recently declined more
those in many other centers, boutique insolvency firm Boale, Wood & Co said it
is getting more calls.
"There have been three people now who have come in to see us with
stock-market issues, they borrowed against their portfolios, and the portfolio
went from a lot of money to no money," said partner Stephen Boale.
Even on the corporate side, where things have been humming along
buoyantly for years, there have been "a bunch" of inquiries, said Boale, who is
president of the British Columbia Association of Restructuring Professionals.
Some Vancouver condominium projects are in financial difficulty, while
people who had speculated on Vancouver's frothy condo market before buildings
were built may be in for trouble ahead.
"There has been a substantial (housing) slowdown," Boale said. "That may
translate into more difficult pressures on those individuals."
While the future "doesn't look rosy," he expects a steady increase in
bankruptcy filings rather than a sharp jump.
(Reporting by Lynne Olver; Editing by Peter Galloway) Keywords: CANADA
BANKRUPTCIES/
(lynne.olver@thomsonreuters.com; +1 416 941 8099; Reuters Messaging:
lynne.olver.reuters.com@reuters.net)
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