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Virginia Secures Nearly $40 Million in Settlement with Defunct Tobacco Company

  • Virginia AG Mark Herring reached a settlement with defunct tobacco company S&M Brands Inc., a tobacco manufacturer that did not sign the 1998 Tobacco Master Settlement Agreement, to end S&M Brands’ responsibility under Virginia’s Non-Participating Manufacturers (“NPM”) statutes to establish and fund a Qualified Escrow Fund account controlled by the Commonwealth.
  • According to the AG’s office, S&M Brands, like all other NPMs, are required to make regular deposits, calculated on the basis of their sales, into Qualified Escrow Fund accounts that can be used to satisfy judgments against the NPM. Unless the NPM assigns its funds to the Commonwealth earlier, the funds left in the escrow accounts were set to be returned to the NPM 25 years after the fund was established. S&M Brands agreed to assign the rights to certain funds to the Commonwealth before the 25 years expired in return for the right to retain a portion of the escrow account funds.
  • Under the terms of the settlement, S&M Brands agreed to pay over $39 million to the Commonwealth and the money will be deposited into the Virginia Health Care Fund.