Tobacco company opposes proposed $32.5B settlement with provinces, smokers: court doc

TORONTO — One of three major tobacco companies involved in years of negotiations with creditors says it opposes the proposed multi-billion-dollar settlement announced in the case earlier this month.

JTI-Macdonald Corp. has filed a document with an Ontario court indicating it does not support the proposal due to “critical outstanding issues.”

The document was filed ahead of a hearing scheduled today to set the next step for the proposed plan of arrangement presented on Oct. 17.

The proposal would see the three companies — JTI-Macdonald Corp., Rothmans, Benson & Hedges and Imperial Tobacco Canada Ltd. — pay $24 billion to provinces and territories and more than $4 billion to tens of thousands of Quebec smokers and their heirs.

Before it can be implemented, the proposed plan must be voted on by creditors, which include plaintiffs in two class-action lawsuits in Quebec as well as provincial governments seeking to recover smoking-related health costs. It must also be approved by the court.

Today’s hearing involves a motion to set a date for the creditors’ vote, which the court document says JTI-Macdonald also opposes.

In a separate court filing, Rothmans, Benson & Hedges said it has no issue with setting a date for the creditors’ vote but reserves the right to object to the proposal at a later stage in the process.

The proposal reached through mediation doesn’t specify each company’s share of the $32.5 billion global settlement, an issue that “must be resolved” in order to move forward, the company said.

“RBH has not agreed to the proposed plan with the allocation issue unresolved,” the company said in the document.

The company added it is “committed to resolving the issue in a timely manner to avoid the risk of substantial objections at the sanction hearing as well as the potential for further complications and delay.”

Other payments laid out in the proposal include more than $2.5 billion for smokers in other provinces and territories who were diagnosed with smoking-related illnesses over a four-year period, and more than $1 billion for a foundation to help detect and prevent tobacco-related diseases.

The proposed settlement comes after more than five years of negotiations as part of a corporate restructuring process that was triggered by a decades-long legal battle.

A Quebec Superior Court judge first ordered the three companies to pay about $15 billion in two class-action lawsuits involving smokers in the province who took up the habit between 1950 and 1998 and either fell ill or were addicted, or their heirs.

The landmark decision was upheld by the province’s top court in 2019, prompting the companies to seek creditor protection in Ontario.

The Ontario court put all legal proceedings against the companies, including lawsuits filed by provincial governments, on hold as the parties negotiated a global settlement.

The stay of proceedings was initially set to expire after a few months, but was renewed about a dozen times. The court planned to hear an application for another extension this month until the proposal was announced.

This report by The Canadian Press was first published Oct. 31, 2024.

Paola Loriggio, The Canadian Press