Debtor entitled to order sealing engagement letter containing commercially sensitive information

Bankruptcy and Insolvency - Companies' Creditors Arrangement Act - Initial application

As result of judgment from Quebec Court of Appeal, debtor and four others were found liable to pay damages of $13.5 billion. Debtor claimed it did not have sufficient assets to satisfy judgment and that enforcement would lead to its demise, impacting its 500 employees, 1,300 suppliers, 28,000 retailers and 790,000 consumers. Debtor was also defendant in significant number of health care costs recovery actions claiming damages of more than $500 billion. On basis it wanted opportunity to seek collective solution to all proceedings, for benefit of all stakeholders, debtor brought application for initial order under Companies' Creditors Arrangement Act. Application granted. Given amount of judgment debt and debtor's apparent inability to pay, there was no question debtor was insolvent company to which Act applied. On basis primary purpose of Act was to maintain status quo while debtor consulted with creditors and stakeholders with view to continuing operations for benefit of company, creditors and stakeholders, it was appropriate to grant stay of proceedings. On basis goal was to reach collective solution, including other defendants in tobacco litigation, it was appropriate to extend stay to those non-applicant third parties. Appointment of proposed monitor was approved. Administrative charges in favour of counsel, restructuring officer and monitor and its counsel in amount of $3 million were authorized. In order to ensure ongoing stability of debtor's business during proceeding, directors' charges in amount of $4.1 million were authorized. In order to protect directors and officers from personal liability, payment of sales taxes, excise taxes and duties of $127 million was authorized. Also in order to maintain debtor's business as going concern, payment of various pre-existing and ongoing obligations arising in ordinary course of business, to employees, trade creditors and like, was authorized. Appointment of proposed restructuring officer, on terms set out in engagement letter, was approved. Debtor was entitled to order sealing engagement letter, which contained commercially sensitive information. Debtor was granted permission to continue application for leave to appeal to Supreme Court of Canada.

JTI-Macdonald Corp., Re (2019), 2019 CarswellOnt 3653, 2019 ONSC 1625, Hainey J. (Ont. S.C.J. [Commercial List]).

Case Law is a weekly summary of notable civil and criminal court decisions by the Supreme Court of Canada, the Federal Court of Canada and all Ontario courts. These cases may be found online in WestlawNext Canada. To subscribe, please visit store.thomsonreuters.ca

Free newsletter

Our daily newsletter is FREE and keeps you up to date on all the developments in the Ontario legal community. Please complete the form below and click on subscribe for daily newsletters from Law Times.

Recent articles & video

Charter issues come to fore on defence of extreme cases of intoxication

Statement of principles media coverage prompts boycott of new bencher

Ontario increases claim limit for Small Claims Court

Clients want lawyers to stop ignoring emails and phone calls

Law professor Anita Anand elected as MP for Oakville riding

CCLA’s Michael Bryant calls for ban on facial recognition surveillance

Most Read Articles

New real estate law podcast begins by tackling cannabis regulations

Legal aid investments save governments money all over the world, Canadian researchers find

Clients want lawyers to stop ignoring emails and phone calls

After 22 years under Les Viner, Torys names new leader