Wednesday, 16 December 2015

A decision from bankruptcy court

Ah, I was asleep at the switch.

And so I missed the decision issued earlier this month by Justice Frank Newbould of the Ontario Superior Court of Justice regarding a proposed settlement between two of the tobacco companies found liable in the Blais-Létourneau class actions and the remnants of an insurance company which had once issued them with policies for $100 million in "excess liability".

During the hearing in Toronto last month, there were some pretty big guns lined up against the proposal that the estate of Reliance Insurance provide the companies with $19 million to close the books on any claims the companies might make as a result of the Quebec class actions or other pending lawsuits. Virtually all of the provinces were on hand to ask Justice Newbould to ensure that their right to make claims would not be snuffed out.

Justice Newbould agreed with the lawyers representing the provincial lawsuits that governments were not restricted by the terms of the federal Winding Up and Restructuring Act,  and that this reason alone was enough to block the proposed settlement between Reliance and Imperial Tobacco and Rothmans, Benson and Hedges.  The deal did not go through.

And would it otherwise have done? Would the companies have been able to take a windfall profit of $19 million without making any payment to those whose injuries triggered the claim?

Justice Newbould made clear that this is a messy area that was not clarified enough for him to have made a decision. Perhaps next time..