The Globe and Mail reports in its Thursday, May 13, edition that the Bank of Canada this week, in a research note examining the financial health of Canadian companies more than a year into the pandemic, noted that business failures have actually been below pre-COVID levels. The Globe's David Parkinson writes that the latest statistics from the Office of the Superintendent of Bankruptcy Canada show that business insolvency filings in the 12 months that ended March 31 -- a period entirely cloaked in pandemic -- were down 30 per cent from the 12 months prior.
The report credited much of that success to government wage subsidies and loans, together with record-low interest rates. However, it cautioned that the insolvency declines may be evidence that those programs are propping up a significant number of companies that will not be able to stand on their own two feet once the supports are removed. "The extraordinary financial support provided to some firms over the past year makes it difficult to get an accurate read of the financial health of businesses. In particular, it is not clear whether firms that currently benefit from financial support are financially viable without these programs," the report said.
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