Atlantic Canada Navigates Uncertainty With Unexpected Economic Strength

With the worst of the COVID-19 pandemic now firmly in the rearview mirror, we are in a better position to understand its true impact on individuals, professionals, and businesses in Atlantic Canada.

While the health crisis itself has receded, the pandemic’s financial legacy continues to shape the region’s economic landscape.

From an insolvency practitioner’s perspective, the story that emerges today is one of paradox: insolvency activity fell sharply during the height of the pandemic, yet the pressures that were merely deferred are now visible in rising filings, delayed restructurings, and uneven recovery across sectors.

Pre-COVID Baseline

In the two years before COVID-19 struck, Atlantic Canada was already showing somewhat elevated levels of personal insolvency compared to the national average, reflecting higher household debt-to-income ratios and a greater reliance on seasonal work.

For businesses, the region’s economy leaned heavily on small and medium-sized enterprises, with particular exposure to tourism, retail, and hospitality. These conditions created both vulnerability and resilience: vulnerable to sudden shocks, but resilient in their adaptability and tight community networks.

COVID Shock

Contrary to what the courts, insolvency experts and lawyers expected, insolvency filings in Atlantic Canada – as across the country – declined during the first two years of the pandemic. Several factors explain this anomaly:

• Federal supports such as the Canada Emergency Response Benefit (CERB), the Canada Emergency Wage Subsidy (CEWS), and wage subsidies provided a financial lifeline.
• Deferrals and moratoria on mortgage, rent, and utility payments gave temporary breathing room.
• Court slowdowns and administrative delays reduced the volume of formal filings.

For individuals, emergency income support covered immediate needs, but many quietly accumulated deferred debt obligations, particularly on credit cards and payday loans.

Professionals from dentists to lawyers to physiotherapists faced dramatic drops in revenue yet avoided insolvency due to wage subsidies and expense deferrals. Businesses, particularly in hospitality and tourism, survived on subsidies, which allowed them to keep the lights on but without true profitability.

The Transition

As government programs wound down and creditors resumed collections, the financial picture in 2022 and 2023 began to shift. Inflation accelerated, especially in housing, food, and energy costs. At the same time, rising interest rates made refinancing debt more expensive and limited the ability of both households and businesses to borrow their way through tight periods.

The results were predictable:

• Individuals increasingly turned to consumer proposals rather than bankruptcies, choosing restructuring over liquidation.
• Professionals faced higher overhead costs without the cushion of subsidies, leading some to scale back or consolidate practices.
• Businesses in retail, food service, and tourism confronted liquidity crunches, with some unable to sustain reopening costs or meet accumulated obligations.

This period marked the beginning of a catch-up in insolvency filings that had been suppressed during the pandemic.

Today’s Snapshot

By 2025, insolvency activity in Atlantic Canada has returned to – and, in some cases, exceeded – pre-pandemic levels. Several patterns stand out:

• Individuals: Consumer proposals now outpace bankruptcies as the most common form of relief, reflecting both the desire to preserve assets and the flexibility proposals allow.
• Professionals: Many smaller practices have merged or been absorbed into larger groups, particularly in health and legal services. Insolvency did not spike dramatically in this group, but restructuring pressures were real.
• Businesses: Small and medium-sized enterprises remain the most vulnerable. Some sectors, like tourism, have rebounded strongly in 2023 to 2025, cushioning broader impacts, while others, particularly retail and food service, continue to see elevated closure and restructuring rates. Larger-scale corporate insolvencies in transportation, energy, and retail have mirrored national patterns, with occasional regional echoes.

Despite these challenges and the current trade volatility with the United States, Atlantic Canada’s economy is showing signs of strength and vibrancy beyond traditional expectations.

As highlighted in an April episode of the Perspectives Podcast by Scotiabank, while fisheries remain culturally important, they account for only 1.5 per cent to three per cent of regional GDP.

The real engines of growth are diverse: offshore oil, mining, forestry, agri-food (including potatoes and seafood processing), manufacturing, IT, digital technologies, life sciences, ocean technologies, and clean energy initiatives.

This diversity of resources, technology, manufacturing, and services means Atlantic Canada is no longer defined by a single industry. Instead, the region is emerging as a dynamic, multi-sector economy with resilience and opportunity for growth.

Lessons Learned & Outlook

The rearview mirror offers several insights:

• For individuals: Temporary supports delayed, but did not erase financial challenges. Planning, liquidity, and debt management remain important.
• For professionals: Cash flow disruption revealed the need for flexibility, diversification, and early adaptation.
• For businesses: Early restructuring efforts and strategic pivots are key to navigating shocks.
• For policymakers and communities: Supports were effective in the short term, and a diverse economic base now offers a stronger platform for future growth.

As an insolvency lawyer, I anticipate that we will continue to work with a range of insolvency matters, including formal consumer proposals, bankruptcies under the Bankruptcy and Insolvency Act, and corporate restructurings under the Companies’ Creditors Arrangement Act (CCAA).

While the need for this work remains, the outlook for Atlantic Canada’s economy is encouraging. The post-COVID recovery, coupled with population growth, urbanization, and sectoral diversification, suggests that the region is moving toward long-term vibrancy and resilience. For practitioners, work will continue, but for the region itself, the trends point toward opportunity, optimism, and a stronger, more dynamic economy.

Looking forward, even amidst current uncertainties in trade or global markets which includes the current trade volatility with the United States, businesses and individuals seem to be better equipped to innovate, adapt, and capitalize on new opportunities.

Glancing back in the rearview mirror, COVID-19 was a stress test. Looking ahead, Atlantic Canada is demonstrating both resilience and potential.

Robert M. Creamer is a partner with Lawson Creamer. He can be reached at rcreamer@lawsoncreamer.com.