Japan Tobacco Inc.'s Canadian unit was granted creditor protection by the Ontario Superior Court after a legal defeat over the risks of smoking threatens the existence of tobacco companies in the country.
The court extended protection in favor of JTI-Macdonald Corp. after the company argued that the damages award in the case of up to 1.77 billion Canadian dollars ($1.32 billion) exceeded its capacity to pay, Japan Tobacco said in a statement. JTI-Macdonald filed for protection from its creditors on March 8.
The Canadian units of British American Tobacco PLC, Philip Morris International Inc. and Japan Tobacco were ordered earlier this month to pay damages initially estimated at about CA$17 billion after losing an appeal over class actions filed by Quebec smokers. The total industry liability was later estimated at CA$13.5 billion. British American Tobacco said the ruling will hit its profit and set aside CA$758 million to cover damages, while Philip Morris cut its 2019 outlook.
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