A last minute cancellation ....

 Turns out that Justice Morawetz will no longer be asked to grant Canada's tobacco companies with a further six month suspension of the lawsuits against them. The hearing that had been scheduled for October 1st has been adjourned.

Instead of asking for a six month stay, the companies are being granted a one-month extension. This is being done without any hearing or public viewing of the decision-making. 

The next day on which day the parties to this long-standing insolvency case will assemble again before the judge is now set for Hallowe'en. 

This decision was made quasi-public when the monitor's reports were circulated to the hundred or more individuals whose names appear on the service list and who receive official documents. The monitor's reports are dated on Friday September 27th, but the first one was not made public until just over 24 hours before the scheduled hearing.

The reports give no explanation for the change -- but each carries a near-identical text: "The Stay Period is currently set to expire on September 30, 2024. The Applicant is seeking the extension of the Stay Period up to and including March 31, 2025. After discussions, the Monitor, the Applicant and other stakeholders have agreed to extend the Stay Period until October 31, 2024. The Applicant’s motion to extend the Stay Period to March 31, 2025 will be adjourned to October 31, 2024."

Are we nearly there yet?

It's easy to speculate but hard to know what is going on behind the curtain that has veiled discussions between tobacco companies and the Canadian provinces and smokers who are suing them.

Another hearing before the Ontario Court has now been set. On October 1st at 10:00 a.m, Justice Morawetz will hear motions from the companies (BAT-Imperial Tobacco Canada, JTI-Macdonald and PMI-Rothmans, Benson & Hedges) for an additional six months protection from their creditors -- up until March 31, 2025.

JTI request for another 6 month stay extension

An agreement to this request would lengthen their litigation stay to - count 'em - six years. Six years of court-approved "business as usual". Six years of legal protection from lawsuits related to their marketing of vaping and other nicotine products.

It would extend to a decade the delay in compensating those injured Quebec smokers who won a judgment against them in 2015. 

What stands between now and the finish line?

It is tempting to conclude from these notices of motion that the talks really are dragging out -- but it may not be accurate to do so. 

Ontario's Chief Justice Morawetz took over the management of this case in the summer of 2023. Following repeated concerns about faltering discussions, he forced a change on the process.  In September 2023, he assigned the task of drafting an proposed agreement to the three accounting firms which are acting as monitors in the CCAA process. 

There were no complaints about the pace of negotiations when the parties next appeared before him in March. Two months later, there were signals that an agreement was being finalized. In May Manitoba's premier said he expected payments to start flowing in 2024 or early 2025 (he was later criticized for breaking confidentiality on these talks).

JTI's motion filed this week says that there are still some unresolved issues:  "... the Applicant has conveyed to the Court-Appointed Mediator its view on certain key issues that are outstanding and must be resolved to achieve a consensual CCAA plan."

It also identifies some of the remaining work in finalizing a settlement agreement: "the Applicant estimates the parties will require at least six months to complete the remaining steps, including the negotiation of a consensual CCAA plan, the commencement and completion of a claims process, calling one or more creditors’ meetings, obtaining a sanction order, and satisfying all pre-conditions for the implementation of a consensual CCAA plan."

BAT-Imperial Tobacco offers less insight - declining to point to any outstanding issues while trying to protect itself from finger-pointing: "ITCAN affirms its commitment to the Mediation process and its ongoing support of the Mediation objectives. The agenda and timelines for the Mediation are governed by – among other things – the Mediator, the numerous participants (each of whom has unique and often times divergent interests), and the underlying issues in dispute. Accordingly, they are largely beyond the Applicants’ control, and any perceived delays in the process cannot be attributed to ITCAN. To the contrary, the Applicants have acted in good faith, without delay and in accordance with the applicable timelines, throughout the Mediation process. Due to the confidential nature of the Mediation process, however, the Applicants cannot comment further on the nature or extent of the progress to date or what issues remain to be resolved by the parties."

PMI-RBH reports that despite the progress that has been made, there are some major disagreements still under discussion. ".. there are some major remaining issues which RBH views as vital to any consensual global settlement of Tobacco Claims."  It does not suggest that the process will be quick. "At this stage, it is difficult to provide a precise estimate of the remaining time needed for completion of these proceedings. Given the number of parties and steps to be taken and work to be done, RBH anticipates that not less than six months (and perhaps more time) will be required" 

And from the other side? 

Next Tuesday is a deadline for provincial governments and other creditors to file a response to the motions, should they choose to do so. In the past, such documents have shed light on the state of play.