The Canadian Tobacco Industry CCAA Proceedings

As part of the inaugural Canadian Insolvency Awards, Restructuring of the Year honours a landmark Canadian restructuring that delivered exceptional outcomes for stakeholders through complexity, scale, and disciplined execution. Few proceedings in Canadian insolvency history meet that description as fully as the CCAA restructurings of the Canadian tobacco industry.

The concurrent and coordinated CCAA proceedings of Imperial Tobacco Canada Ltd., Rothmans, Benson & Hedges Inc., and JTI-Macdonald Corp. resolved nearly a trillion dollars in asserted claims and brought decades of litigation to a close, while preserving ongoing operations and establishing long-term compensation frameworks with national reach.

A restructuring defined by scale and consequence

The tobacco companies commenced CCAA proceedings in March 2019 against the backdrop of unprecedented litigation exposure. Claims asserted by provinces and territories seeking recovery of healthcare costs, alongside class actions and individual claims across multiple jurisdictions, totalled close to $1 trillion and related to conduct dating back to the 1950s.

At stake was not only the future of the companies themselves, but the resolution of some of the most consequential public health claims ever advanced in Canadian courts. The proceedings unfolded against a litigation landscape that had already spanned decades and produced landmark judgments, including a Québec class action judgment exceeding $13 billion.

The complexity of the restructuring was matched by its stakes. A failure to reach consensus would have meant continued litigation across the country, prolonged uncertainty for claimants, and the real risk that recoveries would be delayed or diminished for all stakeholders.

Six years of mediation and coordinated execution

What followed was an extraordinary six-year mediation process involving approximately 25 parties with often divergent interests, supported by multiple court-appointed monitors, counsel teams, and advisors. Hundreds of hours of mediation were devoted to resolving three interdependent issues without which no global settlement could succeed: the total settlement amount, its allocation among claimants, and the allocation of payment responsibility among the tobacco companies.

The result was a coordinated set of CCAA plans of compromise and arrangement, each exceeding 1,300 pages, that together implemented a single, comprehensive global settlement. The plans were unanimously approved by affected creditors in December 2024, sanctioned by the Ontario Superior Court in March 2025, and implemented in August 2025.

Under the plans, the tobacco companies agreed to collectively contribute $32.5 billion over a multi-decade period, including an upfront contribution of approximately $13 billion representing nearly all cash on hand. Ongoing contributions are tied to future net after-tax income and specified tax amounts, ensuring long-term funding certainty for claimants.

Exceptional outcomes for stakeholders

The restructuring delivered outcomes that would have been unattainable through continued litigation.

Provincial and territorial governments secured long-term compensation frameworks to offset healthcare costs associated with tobacco-related illnesses. Class action plaintiffs and individual claimants gained access to structured national claims processes providing compensation of up to $100,000 per claimant. A $1 billion foundation was created to fund research into improving health outcomes related to tobacco-related disease, extending benefits beyond those entitled to direct distributions.

At the same time, the plans released the tobacco companies and their affiliates from historic tobacco-related litigation in Canada, providing finality and allowing ongoing operations to continue under a stable legal framework. The monitors remain engaged as plan administrators for decades, reflecting both the scale of the settlement and the long-term oversight required to ensure its full implementation.

Compared to the alternative of prolonged, uncertain litigation, the CCAA outcome delivered certainty, immediacy, and fairness across a uniquely complex stakeholder landscape.

Broader relevance to the profession

Beyond its scale, the tobacco restructuring stands as a defining example of what the CCAA can achieve when applied with discipline, creativity, and sustained collaboration. The proceedings demonstrated the capacity of insolvency tools to resolve mass litigation, coordinate public and private interests, and deliver outcomes with lasting societal impact.

As Chief Justice Morawetz observed in sanctioning the plans, the restructuring represented “a momentous achievement in Canadian restructuring history” and successfully concluded “among the most complex insolvency proceedings in Canadian history.”

For insolvency professionals, the case sets a benchmark for strategic execution in files where legal complexity, public interest, and stakeholder coordination converge. It underscores the adaptability of the CCAA as a framework not only for financial reorganization, but for resolving some of the most difficult and consequential disputes facing the Canadian legal system.

Professionals Involved

Monitors

• Rothmans, Benson & Hedges: Ernst & Young Inc.

• JTI-Macdonald: Deloitte Restructuring Inc.

• Imperial Tobacco: FTI Consulting Canada Inc.

Counsel to the Companies

• Rothmans, Benson & Hedges: McCarthy Tétrault LLP

• JTI-Macdonald: TGF

• Imperial Tobacco: Osler, Hoskin & Harcourt LLP

Counsel to the Monitors

• EY: Cassels Brock & Blackwell LLP

• Deloitte: Blake, Cassels & Graydon LLP

• FTI: Davies Ward Phillips & Vineberg LLP

Receiver

• JTI-Macdonald TM Corp.: PricewaterhouseCoopers Inc.

Counsel to the Receiver

• Torys LLP

Representative and Claimant Counsel

• Wagners, representative counsel for pan-Canadian claimants

• Klein Lawyers LLP, British Columbia class action

• Fishman Flanz Meland Paquin LLP and Chaitons LLP, Québec class actions

• Sotos LLP (formerly SWS Litigation), Ontario Flue-Cured Tobacco Growers’ Marketing Board

Counsel to Other Key Stakeholders

• Bennett Jones LLP, various provinces and territories

• McMillan LLP, Québec

• Gowling WLG, Philip Morris International

• Stikeman Elliott LLP, certain British American Tobacco entities

• Inch Hammond Professional Corporation and Cozen O’Connor LLP, Grand River Enterprises Six Nations Ltd.

• Lax O’Sullivan Lisus Gottlieb LLP, counsel to the court-appointed mediator, the Honourable Warren Winkler, K.C.

About the Canadian Insolvency Awards

The Canadian Insolvency Awards recognize exceptional restructuring cases, initiatives, and contributions across the insolvency and restructuring profession. Recipients are selected by an independent judging panel based on execution, outcomes, and broader impact, with a focus on cases and team efforts rather than individual recognition.

The Canadian Tobacco Industry CCAA Proceedings were recognized as Restructuring of the Year at the inaugural Canadian Insolvency Awards on February 5, 2026.