British American Tobacco PLC put one of Canada’s top cigarette distributors into bankruptcy protection in the U.S. after that subsidiary, sued by Quebec smokers in 1998 for hiding health risks, was ordered to pay 9.2 billion Canadian dollars (US$6.9 billion), <em>WSJ Pro Bankruptcy</em> reported. Officials who put Imperial Tobacco Canada Ltd. into chapter 15 protection in U.S. Bankruptcy Court in New York said the move is meant to stop creditors from taking the tobacco held at the company’s Ohio and Montana warehouses while it negotiates a payment plan. Tobacco for its cigarettes, grown in Mexico, is stored in those warehouses as part of its importing process. Company officials added in court-filed documents that if legally operating distributors such as Imperial Tobacco shut down, operators that sell untaxed tobacco illegally “will expand to fill the void in the marketplace.” More Canadians are buying illegal tobacco, they said. Judge Shelley Chapman later agreed to temporarily block seizures.
