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A New York bankruptcy judge has given the green light to one of the largest cross-border corporate restructurings in Canadian history, approving U.S. recognition of Imperial Tobacco Canada Ltd.’s multibillion-dollar settlement tied to tobacco lawsuits.

Judge Grants Chapter 15 Approval

On Tuesday, U.S. Bankruptcy Judge John P. Mastando III granted Chapter 15 recognition to Imperial’s restructuring plan without objection during a brief hearing. The recognition marks a critical step in a CA$32.5 billion ($23.59 billion) settlement deal resolving sprawling Canadian tobacco litigation.

“This is the culmination of one of the largest, if not the largest, restructurings in Canadian history,” said Jennifer Feldsher of Morgan Lewis & Bockius LLP, representing Imperial’s U.S. interests.

Decades of Litigation and a Billion-Dollar Reckoning

Imperial, alongside fellow Canadian tobacco giants JTI-Macdonald Corp. and Rothman Benson & Hedges Inc., entered insolvency proceedings in 2019 under the weight of CA$1 trillion in claims alleging decades of tobacco-related injuries.

After years of mediation—stalled at length by the COVID-19 pandemic—a groundbreaking settlement emerged in 2024. The three companies agreed to create a CA$32.5 billion fund designed to pay out class action claimants and reimburse provincial governments for health-care costs linked to smoking.

Settlement Structure and Historic Scale

The deal requires an upfront payment of nearly CA$12.5 billion in cash, followed by the transfer of the companies’ net after-tax income for the next 20 years. Feldsher emphasized that the agreement is the largest of its kind since the landmark 1998 U.S. tobacco settlement, which saw American firms commit $200 billion.

Imperial filed its restructuring blueprint in October 2024, later approved by a Canadian court in March of this year.

U.S. Links and Legal Finality

While Imperial operates solely within Canada, its supply chain passes through the United States, where it also stores inventory. The company also carried legacy U.S. pension obligations from past acquisitions, though those liabilities have now been resolved.

In addition to Chapter 15 recognition, Judge Mastando validated the Canadian court’s appointment of the plan administrator and issued an order barring unauthorized solicitation of claims.