Key points:
Core Request: Imperial Tobacco Canada Ltd. has applied to the U.S. court for recognition of its restructuring plan to implement a $32.5 billion Canadian dollar (approximately $23.5 billion USD) tobacco liability settlement.
Settlement Size: This is the largest tobacco settlement case involving three Canadian tobacco distributors since the U.S. settlement in 1998, resolving over $1 trillion Canadian dollars (approximately $728.2 billion USD) in debt.
Plan Details: The plan includes release of rights and claims injunctions, with settlement payments to be made over 20 years, beginning with an initial payment of over $12 billion Canadian dollars (approximately $8.7 billion USD), allowing Imperial Tobacco to continue operating.
Progress Milestones: The plan has been approved by the Canadian court, and a hearing in the U.S. is scheduled for August 26 by the New York Southern District Bankruptcy Court.
According to a report from Law360 on August 4th, Imperial Tobacco Canada Ltd has requested that a US bankruptcy court in New York recognize and enforce its Canadian restructuring plan. The plan involves a settlement agreement worth 32.5 billion Canadian dollars (approximately 23.59 billion US dollars).
In March 2025, a Canadian court approved a plan to settle the country's long-standing tobacco litigation, in which subsidiaries of the three major international tobacco companies will pay 32.5 billion Canadian dollars (22.67 billion US dollars).
JTI-Macdonald Corp. is the Canadian subsidiary of Japan Tobacco International (JTI);
Rothmans, Benson & Hedges is the Canadian branch of Philip Morris International (PMI);
Imperial Tobacco Canada Ltd. is the wholly owned subsidiary of British American Tobacco (BAT) in Canada.
In a motion filed with the New York court, Imperial Tobacco Canada stated that after six years of negotiations, a settlement agreement has resolved all claims against these distributors within Canada. It is crucial to approve the restructuring plan centered around this settlement in order to implement the agreement effectively.
Motion states that, according to the Companies' Creditors Arrangement Act of Canada, the approved plan requests the release of rights favorable to tobacco companies and issues an injunction prohibiting the initiation or continuation of tobacco claims lawsuits against Imperial Tobacco and other related parties.
The motion stated, "This court must recognize and implement the approved order and the confirmed Imperial Tobacco Plan to complete this historic national settlement agreement reached within the Canadian process and unanimously approved by affected creditors.
In March 2019, facing mounting pressure from tobacco product liability claims, Imperial Tobacco initiated bankruptcy proceedings in Canada. The move came after a Canadian court issued a stay of proceedings, following which Imperial Tobacco filed for Chapter 15 bankruptcy in New York the next day to protect its US assets and tobacco supply chain - which are crucial for its Canadian operations.
The motion states that following the initiation of bankruptcy proceedings, Imperial Tobacco, along with other tobacco distributors, class action plaintiffs' representatives, and all provinces and territories in Canada, have engaged in confidential mediation with the goal of reaching a global settlement on tobacco claims.
After negotiations, Imperial Tobacco's restructuring plan was approved by the court (approved in March 2025). These plans address the over $1 trillion Canadian dollars (approximately $728.2 billion USD) in debt faced by the distributors. The motion noted that the $32.5 billion Canadian dollars (approximately $23.59 billion USD) that the three companies will pay is the largest tobacco-related settlement amount since a similar agreement was reached in the United States in 1998.
This plan allows Imperial Tobacco to continue operating and enjoy the rights and protections outlined in the plan. The settlement amount will be paid over a period of 20 years, with the three companies collectively making an initial payment of over 12 billion Canadian dollars (approximately 8.7 billion US dollars), followed by annual payments over the next 20 years.
The company declined to comment on the recognition motion on August 4th.
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