Bankruptcies down in December compared with November
TORONTO - The number of Canadian consumers and businesses going bust soared nearly 47 per cent in December as the sputtering domestic economy continued to show signs of further trouble ahead.
The Office of the Superintendent of Bankruptcy says 8,299 individuals and businesses went bankrupt in December, up from 5,659 for December, 2007, a jump of 46.7 per cent.
The latest numbers are a staggering reminder of a troubled domestic economy, which appears to be worsening by the day as new layoffs and weaker earnings results continue to pile up.
"There's no brakes on the train and it's going downhill faster and faster," said Douglas Hoyes, a bankruptcy trustee with Hoyes, Michalos & Associates Inc., a province-wide firm with its headquarters in Kitchener, Ont.
"The rate of increases in bankruptcies is certainly increasing, and that can't be good news for the economy as a whole."
However, the December total was down 4.3 per cent from the 8,669 who filed for bankruptcy in November.
The fourth-quarter total for October to December was higher than in the previous quarter and well above the level of the same period in 2007.
In December, 2007, personal bankruptcies amounted to 5,192 while business bankruptcies were 467.
CIBC economist Benjamin Tal predicts that the results will only worsen in the new year, pushed higher by the rising unemployment rate.
"You want to see what a recession looks like? This is a recession," he said, referring to the bankruptcy figures in combination with the weak housing start figures also released Monday.
Tal said bankruptcy figures are rising fast. He noted that more than 100,000 jobs were lost in January and the labour market the main determinant of bankruptcies.
"Therefore, this is just the second or third inning of the bankruptcy story," Tal said.
However, he noted that bankruptcies have been falling over the past decade, saying there is a "little room to go before it really gets bad."
In the latest month, individual bankruptcies totalled 7,821, down 4.2 per cent from November, while business bankruptcies totalled 478, down 5.5 per cent from November.
For the fourth quarter, however, bankruptcies totalled 26,436, up 9.3 per cent from the previous quarter and 25.3 per cent higher than the fourth quarter of 2007.
Hoyes said he's seen a shift in the attitudes of clients who are consulting him for personal bankruptcy advice.
"The people we're seeing everyday are much more worried than they were six months or a year ago," Hoyes said.
"This recession isn't just a theoretical thing anymore. We all know someone who's lost their job, or had their hours cut back, so we all believe 'It could happen to me."'
For 2008 as a whole, bankruptcies totalled 96,774, up 12.3 per cent from the 86,140 recorded in 2007.
David Friend, THE CANADIAN PRESS
February 09, 2009
