Tobacco giants’ creditors approve proposed $32.5B deal for health-care costs, recompense to smokers
A landmark deal that could see three major tobacco companies pay out billions to provinces, territories, and smokers across Canada has reached a significant milestone. The proposed $32.5 billion global settlement between JTI-Macdonald Corp., Rothmans, Benson & Hedges, and Imperial Tobacco Canada Ltd. has been approved by the companies’ creditors after over five years of negotiations.
The agreement, announced in October, includes $24 billion for provinces and territories, $4 billion for Quebec smokers and their heirs, and more than $2.5 billion for smokers in other provinces. Additionally, over $1 billion will be allocated to a foundation aimed at supporting those affected by tobacco-related diseases.
Representatives for the creditors, which include provincial governments seeking to recoup smoking-related healthcare costs, as well as plaintiffs in Quebec class-action lawsuits, voted in favor of the plan during a virtual meeting. Andre Lesperance, a lawyer representing plaintiffs in one of the Quebec lawsuits, expressed satisfaction with the overwhelming support for the proposal.
Before the deal can be implemented, it must receive court approval, with a hearing scheduled for the end of January. Dominique Claveau, executive director of the Quebec Council on Tobacco and Health, emphasized the importance of the court’s role in bringing justice and truth to a long-fought battle.
British Columbia Premier David Eby, whose province initiated legal action against the tobacco companies in 1998, hailed the agreement as a critical step forward after two decades of litigation. However, at least one of the companies has expressed opposition to the plan in its current form.
The Canadian Cancer Society, a social stakeholder in the case, hopes for amendments to the proposal before court approval. The organization’s lawyer, Rob Cunningham, stressed the need for smoking-reduction measures and the release of confidential industry documents, similar to actions taken in the United States years ago.
Manuel Arango, vice-president of policy and advocacy for Heart & Stroke, suggested expanding the foundation’s mandate to include prevention efforts and public awareness campaigns to help people quit smoking. He emphasized the importance of looking towards the future to prevent tobacco-related diseases.
The proposed settlement marks the culmination of a corporate restructuring process initiated by a lengthy legal battle over the health impacts of smoking. In 2015, a Quebec court ordered the companies to pay approximately $15 billion in two class-action lawsuits involving smokers in the province. Following an upheld ruling in 2019, the companies sought creditor protection in Ontario to negotiate a global settlement with their creditors.
With legal proceedings on hold during negotiations, the order has been extended until January 31, 2025, as the parties work towards finalizing the historic deal.
