Cigarette companies warn they might go bankrupt. If they do what happens next?

The cigarette companies are claiming that they are going to be on the ropes financially if they lose the latest round of federal lawsuits.

$280 billion federal lawsuit could bankrupt tobacco companies

What would happen if they did go broke? What would be the real world consequences of the largest US cigarette companies declaring bankruptcy?

The government would bail them out rather than lose all those voters from the tax rolls and the taxpayers would take the hit.

I imagine the states would be in trouble as well. Several of the states that were part of the MSA have already started selling bonds against the revenue from the tobacco payments. Along with the people that dropzone mentioned, there are far too many (important) people that have an interest in seeing that the tobacco companies don’t go under.

I would be very surprised if something as powerful as the tobacco lobby allowed this to happen either. I have heard (reliable cite there!) that there are a lot of pensions that have stakes in tobacco companies, perhaps we could see more retirees coming back into the work force? I don’t think it will happen though.

It might be for the best. It might end the endless queue of lawyers and politicians who have grown used to treating tobacco companies as their own private piggy bank and retirement fund. I’m sick and tired of paying for the baseball teams and yachts of those rich bastards. Yeah, I’m talking about you, Peter Angelos. Where do you think those billions of dollars really come from?

If any tobacco company goes broke, some other company will move into the market. Smokers want their smokes.

I smoke half a pack a day. My state, already financially strapped, would stand to lose a lot of money if the tobacco industry goes belly up.

Unless…they can think of a good substitute cash crop. Something that would be easy to grow in the soil in Tennessee. It would be good if it could have some medicinal value – to help make up for the horrors caused by physical nicotine addiction.

It might be a bonus if it could be smoked – to satisfy those who feel they have to have a cigarette in their hands. But if would be even better if it could be in a form that didn’t have to be introduced into the lungs.

And maybe this could could eventually be used for making other products. Who knows? It could be the best thing that ever happened to me…er…Tennessee.

I’m sure the tobacco companies will find some way to keep going. When Phillip-Morris was running warm, fuzzy “we help the community!” ads here recently, they revealed that their subsidiaries include Miller brewing and Kraft Foods. So the tobacco people get their money whether you’re smoking a Marlboro, drinking an MGD, or eating mac and cheese. I’m sure that, if cigarettes are no longer profitable, they’ll find a way to diversify and cover their butts (no pun intended). During Prohibition, Anheuser-Busch kept their head above water by producing everything from soda pop and ice cream to truck engines. The tobacco companies will figure something out. Maybe they can go into the nicotene patch and gum business?

Cigarette companies warn they might go bankrupt. If they do what happens next?

The push to legalize Marijuana. Menthol Weed lights anyone?

The people at Kraft always hate the idea that Philip Morris owns them because they feel the profits generated from Kraft would only go towards legal fees.

Altria sold Miller to South African Breweries. Kraft was “spun off” though I believe Altria still has a controlling stake in the mac 'n cheese biz.

The mortuary business would take a hit too.

Plenty of folks would step in to fill the void. Especially enticing would be an initial spike in the price of smokes, due to immense startup costs from the newbies.

I don’t know the rules of bankruptcy too well, but I’m thinking that it may merely serve as a means to lessen & restructure their debt.

The thing is this: They are fundamentally profitable. So as mentioned above, either they’ll just keep on chuggin’, or somebody will buy their assets and go into business for themselves.

That’s my guess.

Ignoring the fact that they would simply restructure their debt and keep crankin out them sweet, sweet coffin nails…

A lot of otherwise sane and mild mannered people are gonna get really cranky when they don’t get a nic fix. Better tell Martha to lock up the weppins :stuck_out_tongue:

The mortuary business would take a hit too.


Only in the short term. The people will still die, just later.

The bankruptcy of tobacco companies would not affect the consumption of cigarettes at all. As long as the core business of processing tobacco into cigarettes and selling them to addicts was profitable and legal, the administrators of the bankrupt companies could sell the business - brands, assets, plant, premises, contracts, the lot - to new owners, who would carry right on producing and selling cigarettes.

The sale proceeds would be used to meet (in part) the obligations of the bankrupt companies. Of course, they wouldn’t be large enough to meet them in full.

In short, the creditors of bankrupt companies would suffer, including those who have obtained judgments for damages against the tobacco companies. But the customers wouldn’t notice any changes.

Philip Morris sold SAB a good chuck of Miller at the time, and still owned a small portion of the company. I wonder if Altria still has their hands in the cookie jar? And yes, Altria still has a controlling stake in Kraft.

And, if the new companies put appropriate warning labels on the product, didn’t advertise in youth-oriented markets, didn’t make claims such as “nicotine isn’t adictive”, would probably be legally in the clear – at least until tobacco is banned.

Wouldn’t the effect partially depend on whether it was a reorganization or a liquidation?