JTI-Macdonald Corp

JTI-Macdonald Corp., the third largest tobacco company in Canada, obtained protection under the CCAA on March 8. Based in Mississauga, Ontario, the company is indirectly owned by Japan Tobacco and has approximately 500 employees and 1,300 suppliers. Each year, it pays approximately $1.3B in taxes to the federal and provincial governments. The company, along with Imperial Tobacco Canada Limited and Rothmans, Benson & Hedges, are defendants in two significant class action proceedings that were tried in Quebec. In June 2015, the companies were found liable for moral damages. The defendants appealed, but learned earlier this month that their appeal had been rejected, making them liable for over $500B in estimated damages, with the judgment potentially becoming enforceable immediately. The company is also the subject of significant health care cost recovery litigation that was commenced as a result of legislation passed in various provinces related to alleged "tobacco related wrongs". Asserting that it has no liability in respect of the litigation claims, the company will attempt to appeal to the Supreme Court of Canada while under creditor protection. It will also use the proceedings as a platform to find a collective solution for the benefit of all stakeholders. Deloitte was appointed monitor. Counsel is TGF for the company and Blakes for the monitor. BlueTree Advisors was appointed CRO.