About a week remains before the April 4 and 5th court hearing on whether tobacco companies can continue to use the Canadian Companies' Creditors Arrangement Act (CCAA) to avoid paying damages to injured Quebec smokers (or other 'creditors'). Last night court filings by those who oppose the motion began to appear on one of the Monitor's websites.
There is a lot to plough through! Here's a first course,,,,
The new documents:
1) The Quebec Class Action Plaintiffs Motions and Exhibits
2) Motions by lawyers representing 6 provinces (the Consortium).
3) Additional motions by JTI-Macdonald
The objections:
JTI-Maconald should not be able to seek leave to appeal to the Supreme Court while using CCAA.
3. The Consortium submits that to allow the Applicant to seek leave to appeal to the Supreme
Court of Canada would be contrary to the stated purpose of the Applicant’s CCAA proceedings
and would be an unnecessary, time consuming and costly application, at a time when all parties’
resources and focus should be on an efficient resolution of the CCAA proceedings.
Deloitte should not be appointed as a Monitor for JTI-Macdonald
15. In light of Deloitte’s and/or its affiliates’ relationship with the Applicant and its affiliates,
the Consortium has serious concerns about the ability of Deloitte to fulfill the neutral and
independent role required of a court-appointed monitor.
21. The involvement of various Deloitte entities in respect of the intercompany transactions between JTIM and its related parties, its representations made to the Canadian taxing authorities regarding the creditor-proofing purpose of the intercompany transactions, its professional activities on behalf of the JTI Group (including as auditor for Japan Tobacco International), its professional involvement with the other Tobacco Companies, and its general activities on behalf of the tobacco industry (all as detailed in the Johnston JTIM Affidavit), as well as the failure of Deloitte to fully disclose same in its pre-filing report, creates an appearance of conflict that can only be resolved by the replacement of Deloitte as monitor.
Reducing the payments that JTI-M can make while under CCAA.
Lawyers for Quebec smokers have identified a number of expenses that JTIM is permitted to make.
Top of the list are the loan payments and royalty fees to its related companies as a result of "the tangled web of JTIM's intercompany contracts." They are askign that all of the net cash generated by JTIM during the CCAA process be kept within the company in Canada.
On the strength of these contractual schemes, the JTI Group
has been draining the profits out of JTIM year after year. Those contracts include the
debentures and trademark agreements pursuant to which JTIM proposes to continue to
make payments to its related entity during the pendency of the CCAA Proceeding.
Other payments they want removed from the protected budget of the CCAA include any fees for a restructuring consultant. They say that this is redundant, given the role of Warren Winkler in the related ITL case.
Disentangling the three stays
The decision of Justice Hainey to prevent the plaintiffs in the Quebec class action from putting the Court of Appeal judgment into effect with respect to all three companies raised a lot of eyebrows. In their motion, lawyers for the injured smokers who might have hoped that a claim process would soon be in place lay out the reasons that the court should back down from this approach.
The CCAA stay of proceedings sought by JTIM, with a view to staying proceedings before
the Quebec CA involving only Imperial and RBH, was a collateral attack on the judicial
process of the Quebec CA for an improper purpose, to assist Imperial and RBH which had
not yet filed for CCAA protection.
JTIM has manifestly not met the test for extending the stay of proceedings to third parties,
let alone unrelated third parties. Furthermore, the stay of proceedings in favour of Imperial
and RBH is unnecessary now that each of them has obtained an Initial Order.
The Request for MORE TIME!
In JTIM's motion it is asking for a 3 month extention -- and has signalled that the other companies are doing likewise.
