Government financial support and payment deferrals from creditors kept Canadian consumers afloat in May, resulting in the biggest year-over-year decline in insolvencies since records started being kept in 1988.
Bankruptcy filings declined 51% to 6,111 in May from a year earlier, according to data released Thursday by the Office of the Superintendent of Bankruptcy Canada. That’s the lowest total volume of insolvencies since 2000. On a monthly basis, insolvencies, which include bankruptcies and proposals, were down 8.8% from April.
Business filings were also down sharply in May, plunging 39% from a year earlier to 193, though they rose 18% on the month.
It’s the third straight month of declining insolvencies and is entirely due to government intervention measures during the coronavirus pandemic and subsequent lockdown measures. In May, the Office of the Superintendent of Bankruptcy recorded 2,047 bankruptcies and 4,064 proposals on the consumer side.
Prime Minister Justin Trudeau’s government has spent $174 billion in direct spending in the past three months, with programs including emergency cash benefits and wage subsidies for employers. That, along with payment deferrals from lenders on mortgages and other loans, is giving borrowers some breathing room until the economy is back up and running.
