Canada is pulling all of the measures to make sure households and businesses don’t go bust, but it’s just time for some. Office of the Superintendent of Bankruptcy (OSB) data shows insolvencies increased in Q3 from the previous quarter. The quarterly increase is somewhat surprising, considering the number of lender support programs.
Canadian Insolvencies Rise 7.9% In Q3
Insolvencies are climbing as lockdowns ease, although they haven’t gone above last year’s levels. There were 35,535 insolvencies filed in Q3 2020, up 7.9% compared to the previous quarter. This also works out to a decline of 40%, when compared to the same quarter last year. Not as high as last year, but they’re rising even amongst a more lender friendly environment.
Canadian Quarterly Insolvency Growth
The percent change of insolvency filings in Q3 2020, compared to Q2 2020.Source: OSB, Better Dwelling.
Consumer Insolvencies Rise 8.1% In Q3
Breaking this down, the vast majority of the fillings made were consumer insolvencies. There were 34,708 in Q3 2020, up 8.1% from the previous quarter. This works out to a decline of 40.3%, when compared to the same quarter last year. Clearly most of the quarterly increase is in this area.
Canadian Q3 Insolvency Growth
The percent change of insolvency filings in Q3 2020, compared to Q3 2019.Source: OSB, Better Dwelling.
Canadian Business Insolvencies Rise 3.5% In Q3
Businesses represent the remainder of the insolvency filings. There were 827 filings made in Q3 2020, up 3.5% from last year. This works out to a decline of 24.1%, when compared to the same quarter last year. As you might have assumed from consumer numbers, this demographic is underrepresented in the total.
The numbers in this context don’t quite tell the full insolvency story. Due to unprecedented supports, experts from Deloitte have said they believe “failures will materialize as time passes.” Year-over-year data doesn’t tell us much, because few lenders were in a rush to collect last year. However, there’s been a quarter over quarter uptick, despite more supports and measures in Q3 vs the previous quarter. This means we’re seeing an uptick, even as the government fights fillings. As these measures ease, we should see even more insolvencies, which were at multi-year highs before the pandemic.
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