Personal Injury Claimants Get Seat at Takata Bankruptcy

By Tom Hals | July 7, 2017

People injured by Takata Corp.’s defective air bags were given an official role in the bankruptcy of its U.S. unit on Thursday, allowing them to challenge restructuring plans that plaintiffs’ lawyers have criticized as protective of automakers.

A seven-member official committee will represent economic loss and personal injury or tort claimants, David Buchbinder, a lawyer with the U.S. Department of Justice’s bankruptcy watchdog, told a meeting of creditors of Takata’s U.S. business.

Official committees receive funds from a debtor to hire professionals who can carry out investigations and test financial assumptions.

William Weintraub, a lawyer with Goodwin Procter who is not involved in the Takata case, said he expected the committee “to be active and to make sure that the claims of the car manufacturers are not treated preferentially and that tort victims are fairly compensated.”

A second five-member committee of suppliers and vendors was also appointed, according to Buchbinder.

Takata filed for bankruptcy in Japan and the United States last month, facing billions of dollars in liabilities from recalls and lawsuits stemming from its air bags.

The inflator compound used in the bags becomes volatile with age, causing the devices to inflate with too much force. The air bags have been linked to 16 deaths, mostly in the United States, and hundreds of injuries.

One person appointed to the personal injury committee, Adrian Antonio Pielago, allegedly suffered a major neck laceration and nerve damage last year in an accident involving a Takata air bag, according to court records.

Takata is finalizing a $1.6 billion sale of most of its business to Michigan-based Key Safety Systems, owned by China’s Ningbo Joyson Electronic Corp.

The deal is meant to save 14,000 jobs, provide a stable supply of replacement air bags and finance a $1 billion settlement with the U.S. government.

Personal injury lawyers said at a bankruptcy hearing last month that Takata was deferring too much to automakers, which claim they are owed billions of dollars in recall costs.

Lawyers for Takata’s U.S. business said the automakers provided financing to Takata and received protections in return.

The company has set aside $125 million for injury claims, but lawyers for injured drivers said it may not be enough because millions of air bags have yet to be recalled.

The lawyers say more money could come from Takata’s insurance, as well as from its sale to Key Safety.

(Reporting by Tom Hals in Wilmington, Delaware; Editing by Dan Grebler)


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