CCAA process must be given opportunity to evolve and succeed without multiple, significant, expensiv

Companies' creditors arrangement act | Initial application

Ontario brought action seeking to recover expended health care costs with respect to smoking-related diseases from tobacco companies. Three of defendants had sought protection under Companies' Creditors Arrangement Act (CCAA), and all proceedings against companies and related entities were stayed. Ontario brought motion seeking order lifting stay of its action. Motion dismissed. Ontario action had been ongoing for approximately 10 years, it was extremely significant lawsuit, it would take one year or more of trial time and Ontario sought $330 billion in damages. It was critical to preserve status quo as it existed at time of filings for CCAA protection to provide level playing field needed to attempt to resolve several significant claims, and Ontario's proposal would alter status quo in its favour and would add enormous impediment to resolution. CCAA process was at its very early stages, and it must be given opportunity to evolve and succeed without multiple, significant, expensive distractions. Balance of convenience between all stakeholders favoured keeping status quo in place. Balancing of relative prejudice tipped scales against Ontario, as relative prejudice that might be suffered by all stakeholders far exceeded relative prejudice to Ontario. It would be inappropriate to favour interests of Ontario above all others. Other provinces had outstanding actions against companies, and there was no principled basis to distinguish Ontario action from any of other outstanding actions which had all been stayed.

In The Matter of the Companies' Creditors Arrangement Act, R.S.C. 1985, c. C-36, As Amended and In The Matter of a Plan of Compromise or Arrangement (2019), 2019 CarswellOnt 6533, 2019 ONSC 2611, McEwen J. (Ont. S.C.J.).

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