Statewide bankruptcies plunged nearly 32% in June as the state’s economic recovery continued its momentum.

The 103 cases last month marked the fifth time this year that filings were down from the year-earlier period, and represented the fewest cases for any June in 31 years, according to new data released by the U.S. Bankruptcy Court, District of Hawaii. The last time there were fewer cases in June was in 1991 when there were 85 cases.

Through the first half of 2021, bankruptcies were down 15.2% to 657 from 775 in the year-ago period as they stayed on pace to decline for the second year in a row. The filings in June were off 31.8% from 151 in June 2020 when the COVID- 19 pandemic was near its peak.

“Bankruptcies continue to fall mainly due to the following reasons: (1) the continued federal assistance funding; (2) the extension of the mortgage loan deferral programs, and (3) the recovery of the economy,” Eugene Tian, chief economist for the state Department of Business, Economic Development and Tourism, said in an email.

On Thursday, Hawaii’s Safe Travels program began a new phase that allows mainland U.S. travelers who provide proof that they are fully vaccinated to skip quarantine and pre-travel COVID-19 testing when flying into the state.

“It will definitely help grow Hawaii’s tourist industry and thereby improve Hawaii’s economy,” Honolulu bankruptcy attorney Greg Dunn said in an email. “With continued government support, this could reduce bankruptcies in 2021. Fiscal aid helped reduce bankruptcies in Hawaii this year, but that is likely to change as the long shadow of the economic shock remains. When government financial support expires, bankruptcies will increase.”

Visitor arrivals, excluding returning residents, reached 30,435 on the first day that the exemption started. The number was lower than the per-day average of 31,661 during the first three days of July, but Tian said the total number of visitor arrivals is expected to rise this month and be higher than the same time in 2019.

“Tourism recovered much faster than expected,” Tian said. “The number of international visitors will still be small, but domestic visitors will be way above the 2019 level and more than enough to offset the shortfall of the international visitors. In June 2021, domestic visitors were 10% more than the June 2019 level, and for the first eight days in July, domestic visitors were 19% more than that in the same period in 2019.”

Tian said tourism’s recovery will help reduce bankruptcies but that if the federal assistance money is reduced or terminated and the mortgage deferral stops, bankruptcy filings might increase.

“During the second half of 2021 and going into 2022, it is likely that federal assistance will be diminishing and the mortgage loan deferral will come to the end,” he said. “Bankruptcies may increase but will not be significantly high due to the wider opening of the economy, driven by tourism.”

Besides the pickup in tourism, the economy’s improvement also can be seen in the state’s declining unemployment rate, which plunged four-tenths of a percentage point to 8.1% in May as the state added 4,000 nonfarm payroll jobs.

Tian doesn’t think the delta variant will slow down Hawaii’s economy.

“Hawaii COVID-19 cases have been stable at below three digits,” he said. “With the new development of vaccine to fight the delta variant, the impact of the delta variant is not going to be significant.”

Dunn, however, said the delta variant could be “a game changer for the worst in Hawaii if it gets out of control.” He said an outbreak of the variant could seriously affect tourism spending, reinstitute lockdowns and negatively affect the state’s ability to conduct business.

In June, Chapter 7 liquidation filings — the most com- mon type of bankruptcy — tumbled 40.6% to 76 from 128 in the year-earlier period.

Chapter 13 filings, which allow individuals with regular sources of income to set up plans to make installment payments to creditors over three to five years, rose 22.7% to 27 from 22.

There were no Chapter 11 filings last month, compared with one in the year-earlier period. Chapter 11 filings are primarily for business reorganization.

Around the state, bankruptcies fell in the four major counties last month. Honolulu County filings dropped to 79 from 107, Hawaii County filings fell to six from 14, Maui County filings declined to 16 from 24 and Kauai County filings slipped to two from six.

SEEKING RELIEF

Bankruptcy filings in June fell from a year ago.

2021 2020 PCT. CHANGE

Chapter 7 76 128 -40.6%

Liquidation

Chapter 11 0 1 —

Business reorganization

Chapter 13 27 22 22.7%

Individuals with regular sources of income set up plans to pay creditors over time

Total 103 151 -31.8%

Source: U.S. Bankruptcy Court, District of Hawaii