More Canadian firms than ever are seeking creditor protection

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A record number of Canada’s largest businesses are seeking protection from creditors, a testament to the strains companies are under because of the coronavirus pandemic.

In the three months through June, 27 firms were granted protection under the Companies’ Creditors Arrangement Act, a federal law that gives insolvent corporations that have debt of more than $5 million (US$3.7 million) an opportunity to restructure and avoid liquidation. That’s the most in any quarter since 2009, which is as far back as the data are available, according to the Office of the Superintendent of Bankruptcy.

May and June saw 10 and 12 orders granting protection, respectively, under the CCAA. The average since 2009 is three a month. Previously, the highest monthly total was nine, in December 2011.

Companies “are saying ‘times are tough, it’s not over yet, I just need some breathing room,’” Henry Louis, founder of Insolvency Insider, an industry website, said in an interview.