More than 3 months have elapsed since Chief Justice Morawetz approved the settlements brokered among Canadian provincial governments and the 3 large tobacco companies that have been the target of class action and cost-recovery suits for two decades.
That approval was only an important finishing step in this saga, but came without an indication of when the agreement will be implemented and when the companies' victims will receive some compensation. Little information has been shared about that implementation date - although one mid-May news report suggested it would be in about "90 to 120 days"
A joint motion filed this week by Rothmans, Benson & Hedges and Imperial Tobacco Canada and separate motions ITL hint at the activities that are taking place behind the scenes. These will be the subject of a hearing next Wednesday (June 18), which can be watched on YouTube at: https://youtube.com/live/VP2lCOG8zf8?feature=share
Gaining access to the security deposit
Chief Justice Morawetz is being asked to briefly suspend the stay of proceedings in order to allow the companies to approach Quebec courts. This is apparently required for the companies to access the almost $1 billion in security that the Quebec Court imposed on them 10 years ago and that will form part of their payments to injured smokers, the provinces and others. (JTI was not required to make a deposit).
He is also being asked to grant orders which approve three settlements entered into by Imperial Tobacco:
1. Resolving a dispute with Revenue Canada
In June 2019, shortly after the insolvency protection was in place, Revenue Canada disputed certain claims for tax deductions made by Imperial Tobacco for the 2011 and 2014 tax years, and made similar subsequent demands the following year for the 2015-2018 tax years.
The affidavit filed this week reports that Revenue Canada was seeking $42.3 million for 2011 (which would increase provincial tax by $6.5 million), with interests adjustments for delayed payment. The amount sought for 2014 was $64.3 million (plus $10.3 provincial). Additional tax demands totaled $7.5 million for 2015, $46.8 thousand for 2016, reduced overall tax for 2017 by $12.7 million, with a further reduction of $16.3 million for 2018. At the end of 2020 the assessment notice issued by Revenue Canada said the company owed $56,748,563.35 (shown below).
It would appear that the Revenue Agency was willing to resolve this large bill for less than 3% of the amount billed in 2020. The settlement reached with ITL (and included in the material filed) involved "an aggregate payment by ITCAN of $1.5 million and the exchange of full and final mutual releases."
2. Finalizing obligations to 59 Genstar retirees.
Imperial Tobacco's legacy obligation to retirees of a real-estate company it sold many years ago was the subject of a non-controversial decision early in the CCAA process. It would appear there were lingering issues with 59 affected individuals which were resolved by the company at the beginning of 2025 in return for a payment of $850,000. The company wants these to be resolved through a special order of the court, and not through the "miscellaneous claims" process provided for in the settlement.
3. A contribution from insurance companies.
Both ITL and RBH had at some point in previous years had liability-related policies with various insurance companies. In the material filed in advance of the June 18th hearing, ITL reports that it has reached a settlement with certain of its insurers for payments "totaling $2,750,000, to be held in trust by the Monitor" which will be transferred as part of payments made on the day the settlement takes effect.
A copy of the settlement, which includes some information on the policies held by the companies, was included in the material filed.
