“Government support has bridged the revenue gap for many companies affected by pandemic restrictions and is likely to continue doing so at least until the end of these extensions in October,” said CAIRP Chairman Mark Rosen.
Rosen warned that corporate bankruptcy filings will rise if they are unable to return to near pre-pandemic levels before government support expires in October. That’s practically certain, as surveys by the Canadian Federation of Independent Business (CFIB) show that the hardest hit companies are expecting a two-year recovery path.
A similar trend can be seen among consumers, whose bankruptcies fell by 11.3% in July compared with June. Just over 6,600 Canadians filed for bankruptcy during the month, which was below pre-pandemic levels, according to CAIRP. The volume of consumer bankruptcies also reflected a 22.6% decrease for the 12 month period ended July 31.
“The fourth wave and the resulting expansion of income support for unemployed workers have prolonged the low consumer bankruptcy rates we saw in the wake of the pandemic,” said CAIRP board member André Bolduc.
“This probably hides some of the financial problems that are just below the surface for many Canadians – those whose incomes have been severely impacted by COVID-19 and who have had to add government aid or credit to that income.”