Every day seems to bring more paper to read.
Today more filings appeared on the website of FTI Consulting, which is the firm acting as a Monitor and charged with making public official documents related to Imperial Tobacco's use of federal bankruptcy laws to stop the clock on all litigation against it in Canada. The new material filed today relate to filings in the U.S. for "Chapter 15 Proceedings".
Meanwhile, information was circulated also in the United Kingdom where BAT talked about the case during its scheduled "Capital Markets Day" presentations to investors.
Rather than paraphrase, here are some extracts from the 14-slide presentation.
Quebec Court of Appeal Decision: Supreme Court Appeal
- ITCAN continues to disagree with the judgments of the Quebec Court of Appeal and the Quebec Superior Court
- While ITCAN intended to seek leave to appeal the decision to the Supreme Court of Canada, all proceedings are now stayed due to ITCAN's decision to seek protection under the Companies' Creditors Arrangement Act (CCAA) on 12 March 2019.
CCAA Filing: Background
- 12 March: Board of Directors of Imperial Tobacco Canada Limited informed BAT that it sought protection for the company under CCAA. (CCAA: A federal statute that allows corporations to restructure their affairs while continuing to operate in the ordinary course of business.)
- The decision to file follows the Quebec Court of Appeal decision and the recent decision of a local competitor to seek CCAA protection.
- Initial Order obtained from the Ontario Superior Court of Justice on March 12.
CCAA Filing: Process - Appointment of a Monitor
- FTI has been appointed as Monitor to the company. Monitor's role:
- A court appointed position.
- Will have full access to the business and will monitor finances.
- Report periodically to the Court on business matters and matters related to the development of the plan.
- Assist with negotiations and the development of a final settlement.
- Can seek advice and directions from the Court as required.
CCAA Filing: Expected impact is 'Business as Usual' operations
- ITCAN will continue to operate as a going concern.
- We expect the CCAA process to follow its normal course, under court supervision and that the company will continue to operate as usual in the meantime.
- All tobacco litigation is stayed with respect to the company and all of its affiliates, including BAT defendants.
- CCAA provides an opportunity to finally resolve all tobacco litigation in Canada within a structured negotiation process.
CCAA Filing: Next Steps
- A comeback hearing will occur on 4 April whereby:
- All claimants and stakeholders can appear and challenge any aspect of the initial order.
- It is likely that challenges will occur, but none have yet been received.
- In the meantime, all litigation is stayed and stakeholders are being informed of the filing.
- Imperial will now begin engagement with claimants and other stakeholders to advance a Plan of Arrangement.
Hundreds of pages have been put on record. You think it unlikely that all of this was written in the two weeks since the Court of Appeal ruled? Me neither.
Turns out the this development has been four years in the making. As the Monitor's first report notes "In anticipation of the Quebec judgment and pursuant to an engagement letter dated March 13, 2015, FTI was engaged to prepare, on a contingency basis, for the possibility of insolvency proceedings in which FTI would act as Monitor..." (emphasis added)
