The Canadian tobacco manufacturer JTIMacdonald Corp has been granted protection from its creditors following a March 1 court judgement under which it is liable for an award that exceeds its capacity to pay.
In a note posted on Japan Tobacco Inc’s website on Saturday, the company said that, as announced previously, the Quebec Court of Appeal had dismissed an appeal by JTIMacdonald Corp. (JTI-MC), a member of the JT Group, and other Canadian tobacco manufacturers of a lower court decision in the two class action lawsuits heard together in Montreal.
‘JTI-MC filed for protection from its creditors under the Companies’ Creditors Arrangement Act (CCAA) on March 8, 2019, local time,’ the note said. ‘This filing followed the Quebec Court of Appeal’s judgment on March 1, 2019, local time, making JTI-MC liable for up to C$1.77 billion, of which it is required to pay C$145 million as an initial deposit.
‘As the amount of the award exceeds JTI-MC’s capacity to pay, JTI-MC has decided to seek protection from its creditors under the CCAA so as to continue its business operations. The Ontario Superior Court has granted the CCAA application and extended protection in favor of JTI-MC. Whilst all of the proceedings pending against it are now stayed, JTI-MC intends to continue to proceed with an appeal to the Supreme Court of Canada.
‘JTI-MC filed for protection as it considers doing so to be the best possible option for JTI-MC. It enables JTI-MC to carry on business in the ordinary course.
‘JTI-MC is the only JT Group company that is party to these proceedings and the financial impact of JTI-MC’s protection under the CCAA is currently under review. If any material impact on JT Group’s consolidated financials is identified, JT will announce it in a timely manner.’