Saturday, 23 March 2019

Another one bites the bullet - RBH files for creditor protection

There are many times in my life when news that all of Canada's large tobacco companies had been forced into creditor protection would have felt like BIG NEWS.

But when  Rothmans, Benson & Hedges sent the news around yesterday evening that it too had a court order suspending all legal action against it so that it could "carry on its business in the ordinary course",  the moment felt far more bland.Formerly unimaginable events are now occurring weekly.

The order protecting RBH was issued yesterday by Justice Patillo of the Ontario Superior Court. The substance of the Order was roughly similar to those issued by his colleagues over the past couple of weeks. As with the others, there is a comprehensive stay of all legal proceedings other than the rights of the companies to ask the Supreme Court to agree to review the decision of the Quebec Court of Appeal  which landed  on them 3 weeks ago.

With this latest move, the companies are united in sending to governments and other claimants a clear message: "Let's talk".

As Justice Patillo put it yesterday "RBH requires CCAA relieve to enable it to pursue a CCAA plan of arrangement while continuing to operate its business and keep creditors and contingent creditors on an equal footing to allow it to deal fairly with the claims against it, with a view to a global settlement."

Whether negotiations have begun is not known. In the Order issued by Justice McEwan last week, former judge Warren Winkler was given a $1 million budget to act as a "Interim Tobacco Claimant Coordinator".  Presumably he is already at work if he  wants to have something to report when the whole issue is considered again (the 'comeback motions') on April 4 and 5th. That hearing will now involve all three companies.