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World
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| Japan Tobacco's Canadian Unit Granted Bankruptcy Extension15 September 2004 14 43 Source »»»The payment would cause ``material erosion'' in the financial position of the unit and that was ``sufficient for protection at this time,'' Ontario Superior Court Judge James Farley said after a daylong hearing. The protection was set to expire Sept. 22. Quebec Revenue Minister Lawrence Bergman is seeking to recover tobacco-tax revenue the government said was lost to smuggling between 1990 and 1994. On Aug. 24, amid Quebec's seizures of revenue, the company sought and won bankruptcy protection. The company isn't entitled to bankruptcy protection because it has positive cash flow and is avoiding only one creditor, the government of Quebec, Paul Macdonald, a lawyer representing the province, told the court. ``The only creditor entitled to be paid, and who has not been paid, is the minister,'' Macdonald said. ``It's an end run around the Quebec government.'' JTI-Macdonald, which has its corporate offices in Toronto, needs the protection to stabilize its business, said Frank Newbould, the lawyer representing the company. The Quebec government's seizure of 40 percent of the company's revenue is based on ``unproven allegations'' that taxes weren't collected on the cigarettes, Newbould said. Ernst & Young Inc., the bankruptcy monitor, supported JTI- Macdonald's request for an extension.
Joe Schneider
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