Canadian bankruptcies post biggest Jan. drop in 20 years

The number of Canadian bankruptcies reported in January dropped by 6.7% from December in the biggest decline for the month in 20 years, government figures showed.

The number of bankruptcies declined 9.4%, while bankruptcy proposals increased 0.3%, the Office for the Superintendent of Bankruptcy said. The total number of insolvencies in January was 2.7% lower than the same month in 2009, with business failures showing the biggest decline, it said.

Traditionally, January is a month when bankruptcies rise, the office said.

For the 12-month period total insolvencies increased by more than a quarter, almost entirely fuelled by personal bankruptcies. Canada’s household debt levels have reached record levels, raising concern about the potential impact of rising interest rates on consumer finances.

Business insolvencies for the past 12 months dropped by 10.3%. This was mainly due to a drop in failures in the forestry, agriculture, fishing, construction and hunting sectors.

There was also a decline in transportation and warehousing failures.

Regionally, Ontario showed the biggest improvement amongst the most populous provinces, with insolvencies declining 18% from the previous year. Ontario’s manufacturing industry was among the hardest hit in the recession.

Manitoba bankruptcies dropped 14%, while in Prince Edward Island they declined almost 13%. Insolvencies in British Colombia declined 2.4% on the year.

Year-over-year, Quebec, New Brunswick and Alberta all continued to report an increase in bankruptcy rates

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