Only 160 Canadian businesses filed for insolvency in July, the lowest number recorded in 35 years, according to the Canadian Association of Insolvency and Restructuring Professionals (CAIRP).
The 160 business insolvencies marked a 28.3% decline compared to June, according to data from the Office of the Superintendent of Bankruptcy (OSB). It’s the largest month-over-month decrease since the start of the pandemic, CAIRP said in a press release on Wednesday.
“Government support has bridged the revenue gap for many businesses impacted by pandemic-related restrictions and will likely continue to do so at least until those extensions come to an end in October,” said CAIRP chair Mark Rosen in a statement.
“If businesses aren’t able to ramp back up to near pre-pandemic levels by then, we will see the number of insolvency filings begin to climb.”
Business insolvencies for the 12 months ending July 31 were down 21.2% compared to the previous year, according to OSB data. Construction and retail businesses saw the largest decline in insolvencies, whereas those in the mining, oil and gas extraction sectors, as well as those in finance and insurance, saw the largest increase.
Helping Canadian businesses survive the pandemic has been a significant issue in the 2021 federal election campaign.
Currently leading in most polls, the Conservative Party of Canada has vowed in its platform to pay 50% of new hires’ salaries for six months following the end of the government wage subsidy, provide a 5% investment tax credit for capital investments made next year and in 2023 with the first $25,000 refundable for small businesses, and create a 25% tax credit on up to $100,000 that Canadians personally invest in small and mid-size enterprises over the next two years.
The Liberal Party of Canada has pledged to extend the Canada Recovery Hiring Program to March 31, increase annual small business financing by $560 million, and allow privately owned Canadian-controlled businesses to expense up to $1.5 million of “growth-enhancing” investments such as software, machinery and patents.
The NDP has vowed to maintain wage and rent subsidies for businesses until they’re able to fully reopen, implement a long-term hiring bonus to pay the employer portion of employment insurance and the Canada Pension Plan for new or rehired staff, and cap high credit card merchant fees at 1% maximum.
Consumer insolvencies also dropped — both in July and for the 12-month period ending that month, according to the OSB data.
Consumer insolvencies declined 11.3% in July versus June. The 6,604 Canadians who filed for insolvency in July was below pre-pandemic levels.
The number of Canadians who filed for insolvency over the 12-month period ending July 31 decreased by 22.6% compared to the previous year.