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During the coronavirus health crisis, provincial and federal governments established measures to limit the spread of the virus. Several industries were forced to cease their operations for an indefinite period. Here is an overview of the industries most at risk of declaring bankruptcy in Quebec due to the coronavirus and the solutions offered by Labelle-Marquis.
The health measures taken by the government
The health measures taken by the government of Quebec started on March 12. That day, the government banned foreign travel for State employees and recommended that the public avoid non-essential travel.
On March 14, the provincial government declared a health state of emergency. From that date, measures were taken that would have a major impact on the economy.
The next day, Quebec announced the closure of bars, gyms, and other gathering places. All indoor gatherings were also banned. Restaurants, for example, had to operate at 50% of their capacity. A week later, they completely ceased their operations until June.
On March 16, the federal government closed the Canadian border to foreigners, except for Americans. Two days later, all borders were closed to non-essential travel. Tourist trips abroad were therefore officially prohibited.
On March 22, Quebec announced the closure of shopping malls and hair and beauty salons at the same time as that of restaurants.
The next day, the government of Quebec announced the closure of all businesses deemed non-essential until April 30. Sectors deemed essential and companies where all employees work from home were allowed to continue their operations.
On March 29, all indoor and outdoor gatherings were banned. People who violated the rules were subject to a fine of $1,546.
The industries most affected by bankruptcy in Quebec
At the start of May, the government gradually allowed certain industrial sectors to reopen. Some were therefore able to take advantage of a breath of fresh air that would help them get through the crisis.
However, certain industrial sectors such as aviation, tourism, and culture, as well as gathering places such as gyms and bars, were the last to receive confirmation of their reopening. These industries are among those that are most at risk of going bankrupt in Quebec.
Airlines
Since the closure of the borders, the aviation industry has suffered greatly. In addition, air traffic fell by 75% between March and April, and revenue from passengers decreased by half. According to the International Air Transport Association, without financial assistance, between 80 and 90% of airlines could go bankrupt by the end of July.
International tourism
The tourism industry has also been heavily impacted by the closure of the borders. Travel agencies that used to offer international trips were forced to only offer trips within the Canadian border.
Since tourism is a luxury product, few people have the means to pay for trips when they are in a difficult financial situation. This, therefore, reduces revenue.
Tourisme Montréal anticipates an 80% decline in revenue for the summer season. The organization also estimates that spending by travelers in the country will decrease by 31 to 56%, which represents a shortfall of $4.8 to 8.8 billion in Quebec alone. The hotel sector is one of the most affected.
Fortunately, the tourism industry is now benefiting from $753 million in financial assistance from the government of Quebec, including $250 million for the hotel sector.
Culture
To attend a show, people need to gather. With the health measures aimed at limiting gatherings, the cultural industry can no longer continue its operations as before. Cirque du Soleil, a jewel of the Quebec economy, is even considering declaring bankruptcy after laying off 95% of its staff.
Fortunately, the government of Quebec has announced $400 million in assistance to the cultural industry, which will be used to support local films, TV series, music, and shows.
What are the possible solutions to avoid bankruptcy in Quebec?
Bankruptcy isn’t always the only possible solution. Other solutions are possible to let you make a fresh start. Here are the means at your disposal to breathe new life into your finances.
Corporate debt restructuring
If you are a company experiencing financial difficulty, you can make a corporate debt restructuring to your creditors. This lets you spread out your debt repayment period to avoid bankruptcy. We can help you draw up your proposal to increase the chances that it will be approved during the creditors’ meeting.
The consumer proposal
If you’ve just lost your job and are at risk of declaring personal bankruptcy, you can make a consumer proposal to your creditors. This will allow you to extend your debt repayment period by up to 60 months.
Debt consolidation
Thanks to debt solution, it’s also possible to consolidate your debts into a single payment. However, to be eligible, you must have a good credit report. In addition, your debt ratio must not exceed 40%.
The bankruptcy process
When it is no longer possible to repay your debts, bankruptcy becomes the only possible solution. However, you have rights when you apply for protection under the Bankruptcy and Insolvency Act. We can provide you with valuable advice that will let you avoid losing everything you own.
Why trust Labelle Marquis?
We are a licenced insolvency trustee with more than 35 years of experience in the field. Whether it’s for a debt restructuring proposal, a consumer proposal, personal bankruptcy, or corporate bankruptcy, we have the expertise to support you appropriately.
If you need advice on your financial situation, talk to us now. We will be pleased to answer all your questions.