Bankruptcies and business closures were up across North America for 2023.
According to statistics released by the Administrative Office of the U.S. Courts system, annual business bankruptcy filings rose 29.9 percent, from 13,125 to 17,051, in the fiscal year ending September 30, 2023.
Additionally, according to the Government of Canada’s Insolvency Statistics (bankruptcies and proposals), Canadian business insolvencies for the 12-month period ending July 31, 2023, increased by 38.3 percent compared to the 12-month period ending July 31, 2022.
Why is this? The answer isn’t something everyone hasn’t heard before—but it’s hard to argue against the lingering aftermath effects of the pandemic, which include but are not limited to significant inflationary pressures.
Every year, Blueprints discusses a company that closed its doors during the prior year. Our objective is to see if we, as credit extenders, can learn from the company’s decline or help reinforce processes to minimize future negative experiences.
The following case study is intended to provide insight (or hindsight) and lead to more proactive steps when it comes to authorizing a sale to a new prospect or when the next customer begins to struggle or fail.
Lakeside Produce Inc.
Lakeside Produce Inc. BB #:158819 was established in 1994, described as the marketing and sales arm for a group of related greenhouse operators, which specialized in growing various varieties of tomatoes, cucumbers, and peppers.
Though the occurrences are rare, the industry has seen a few notable hothouse growers in the Leamington-Kingsville area fall victim to hard times over the last twenty years, such as Red Zoo Marketing and Fresh Pack Produce C.A. Ltd.
The latest, Lakeside Produce Inc., ended its journey when it filed an Assignment in Bankruptcy on January 17, 2023 in the Ontario Superior Bankruptcy Court.
Initial creditor lists reflected $187,889,241 in total debt, with $18,295,564 recognized as unsecured and $166,013,444 was secured. The estimated value of assets on hand at the time of the bankruptcy filing was reported at $3,580,233.
The preliminary creditor list showed 299 unsecured creditors, while two lending institutions were recognized as the secured. There were abundant six-figure debts owed to both produce and logistics companies across the industry.
This is the first of a three-part excerpt from the Credit and Finance department in the January/February 2024 issue of Produce Blueprints Magazine. Click here to read the whole issue.
