Philip Morris faces a mountain of litigation

The company, now part of the Altria Group and home to Marlboro cigarettes, was hoping the bill would cut the sum - the amount it has to lodge with the court if it is to allow an appeal - by 90%.

But the Illinois Senate's Executive Committee thought otherwise, rejecting it 7-3 on what a spokeswoman said was a bipartisan vote.

The setback could mean difficulties for Philip Morris in covering its massive liabilities to other states who have sued it, and other tobacco companies.

It has till 15 April to make a $2.5bn payment due to states under a 1998 countrywide settlement, money, and says it cannot afford both expenses at once.

Some observers, notably credit rating agency Standdard & Poor's, even think the obligations could push the company over the edge into bankruptcy.

The 1998 agreement levelled a total of $206bn in fines over 25 years to compensate states for the cost of caring for sick smokers.

The 50 states in the US, meanwhile, are as nursing mammoth deficits topping $27bn, and are desperate for the tobacco money to help them plug the holes in their budgets.

Seeing the light

Philip Morris's Illinois problems stem from an Illinois court's decision to fine Philip Morris $10.3bn for misleading smokers into believing so-called "light" cigarettes were not as bad for their health as full-strength ones.

The court went on to rule that without posting a bond of $12bn, no appeal would be permitted.

Philip Morris said that 15 states had already agreed caps.

Both the original court decision, and the Senate Executive Committee's vote, it said, were unconstitutional.

"We think a bond of that size... violates Illinois law, and basically serves to deny us access to the appellate process because we could not post a bond of that size," a spokesman said.

Burden of litigation

In addition to the light cigarettes case, known as the Miles case after its initial plaintiff, Philip Morris is being sued by a long-time smoker who claims he was deceived by cigarette marketing, by the state of Florida, and by the US Justice Department.

So far, it has proved adept at fending off the most punitive financial damages.

In the Florida case, the first class-action lawsuit against a tobacco company, damages of $145bn were awarded against the firm in 2000, but no final payment or judgement has yet been reached.

But the effects of the burden are telling on Altria's share price, and that of other tobacco firms.

Altria stock has slid more than 40% over the past 12 months, although hopes of a positive vote in Illinois underpinned slight gains on Thursday.