Tobacco giants would pay out $32.5B to provinces, smokers in ‘historic’

Three tobacco giants face the prospect of paying close to $25 billion to provinces and territories and more than $4 billion to tens of thousands of Quebec smokers and their loved ones as part of a corporate restructuring process triggered by a long-running legal battle.

A proposed plan of arrangement was filed in an Ontario court Thursday after the companies — JTI-Macdonald Corp., Rothmans, Benson & Hedges and Imperial Tobacco Canada Ltd. — spent more than five years in negotiations with their creditors.

The companies sought creditor protection in Ontario in early 2019 after they lost an appeal in a landmark court battle in Quebec.

The Ontario court put all legal proceedings against the companies on hold as they tried to work out a deal with their creditors, which include the plaintiffs in two Quebec class-action lawsuits as well as provincial governments seeking to recover smoking-related health-care costs.

Under the proposed plan filed Thursday, provinces and territories would receive payments over time, with roughly $6 billion to be paid out when the deal is implemented.

‘Historic and unprecedented’

The Quebec plaintiffs would file claims for compensation of up to $100,000 each.

The proposed plan also includes more than $2.5 billion for smokers in other provinces and territories who were diagnosed with lung cancer, throat cancer or chronic obstructive pulmonary disease between March 2015 and March 2019. They would be eligible for up to $60,000 each.

Bruce W. Johnston, one of the lawyers for the Quebec plaintiffs, said the proposal is “historic and unprecedented” because it allows for the compensation of smokers as well as governments.

“When we took this case, there had never been a single plaintiff who had received a single penny from a tobacco company,” he said Thursday.

“We took this case in 1998 and as a result of our case, not only will tens of thousands of victims be compensated by the tobacco industry in Canada, most of them in Quebec, but also governments are going to be sharing $24 billion.”

The plaintiffs have endured lengthy delays and now they can finally see that there’s “probably a light at the end of the tunnel and that they will receive compensation,” he said.

Many class-action members have died

While many of the class-action members died before they could receive any money from the companies, their successors — and in some cases, their successors’ successors — will be eligible for compensation, he said.

The proposed deal would also see the companies pour more than $1 billion into a foundation to fight tobacco-related diseases. That amount includes $131 million taken from the money allocated to the Quebec plaintiffs.

The proposal must still go through several steps before it can be put into action,…