$32.5B settlement with tobacco giants approved by creditors, lawyer says

A proposed deal that would see three tobacco giants pay out billions to provinces and territories, as well as smokers across Canada, has been approved by the companies’ creditors, a lawyer representing some of the creditors said Thursday, calling it an important milestone in a lengthy legal saga.

The proposed $32.5-billion global settlement between the companies — JTI-Macdonald Corp., Rothmans, Benson & Hedges and Imperial Tobacco Canada Ltd. — and their creditors was announced in October after more than five years of negotiations.

Representatives for the creditors, which include provincial governments seeking to recover smoking-related health-care costs as well as plaintiffs in two Quebec class-action lawsuits, voted on the plan in a virtual meeting Thursday afternoon.

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André Lespérance, who represents plaintiffs in one of the Quebec lawsuits, said creditors overwhelmingly supported the proposal.

“We’re not surprised, but we’re glad the creditors are united right now to see this plan approved,” he said in French.

Before the plan can be implemented, it must obtain the approval of the court. A hearing has been scheduled for the end of January, and Lespérance said he’s optimistic the proposed deal will clear that hurdle as well.

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“I think we’re really close to the end,” he said.

Dominique Claveau, executive director of the Quebec Council on Tobacco and Health, which is part of the lawsuit, said they look forward to having the court “bring this long-fought battle for justice and truth to its conclusion.”

At least one of the companies has said it opposes the plan in its current form.

The proposed deal includes $24 billion for provinces and territories, $4 billion for tens of thousands of Quebec smokers and their heirs, and more than $2.5 billion for smokers in other provinces and territories. It also includes more than $1 billion for a foundation to help those affected by tobacco-related diseases.

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The Canadian Cancer Society, which is a social stakeholder in the case, said Thursday it hopes the proposal will be amended before it’s approved by the court.

Rob Cunningham, the organization’s lawyer, said the plan should include smoking-reduction measures and the release of confidential industry documents, similar to what was achieved in the United States decades ago.

“There’s a once-in-a-lifetime opportunity to better control the tobacco industry and to reduce tobacco use. We’re never going to get this chance again,” he said.

The foundation funded through the proposed deal should also have its mandate expanded to include prevention of tobacco-related disease and public awareness efforts to help people quit smoking, said Manuel Arango, vice-president of policy and advocacy for Heart & Stroke.

“We already have a lot of studies and a lot of knowledge about the treatment of tobacco-related disease,” he said. “So it’s really about looking forward and helping prevent tobacco-related disease in the future.”

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The proposal is the culmination of a corporate restructuring process set off by a decades-long legal battle over the health effects of smoking.

In 2015, a Quebec court ordered the three companies to pay about $15 billion in two class-action lawsuits involving smokers in the province who took up the habit between 1950 and 1998 and either fell ill or were addicted, or their heirs.

Four years later, the landmark ruling was upheld by the province’s Appeal Court. The companies then sought creditor protection in Ontario in order to negotiate a global settlement with their creditors.

All of the legal proceedings against them were put on hold during the talks. That order has now been extended until Jan. 31, 2025.

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