Au­tomak­ers to pro­vide up to $130 mil­lion for Takata’s US set­tle­ment

Business World - - WORLD BUSINESS -

WILM­ING­TON, DELAWARE — A group of 13 au­tomak­ers will con­tribute as much as $130 mil­lion to com­pen­sate

The agree­ment clears the way for the sale of Takata’s non-in­fla­tor busi­ness to Key Safety Sys­tems, a unit of China’s Ningo Joyson Elec­tric Corp., for $1.6 bil­lion, help­ing to en­sure a steady sup­ply of car parts for the world’s big­gest au­tomak­ers.

Takata and its US unit, TK Hold­ings Inc, filed for bankruptcy last year in the wake of the world’s largest au­to­mo­tive safety re­call, trig­gered by air bag in­fla­tors that can ex­plode with ex­ces­sive force, un­leash­ing me­tal shrap­nel in­side cars and trucks.

At­tor­ney Joe Rice of Mot­ley Rice, who rep­re­sents dozens of per­sonal in­jury plain­tiffs in the bankruptcy, said the deal, which was dis­closed in court pa­pers on Satur­day, was aimed at keep­ing Takata op­er­a­tions afloat so it could make re­place­ment in­fla­tor kits.

Tens of mil­lions of air bags with the in­fla­tors have been re­called but not yet re­placed.

In an in­ter­view late on Mon­day, Rice said the group of 13 au­tomak­ers would con­tribute about $80 mil­lion to $130 mil­lion to Takata’s bankruptcy es­tate to help com­pen­sate those in­jured by the Takata in­fla­tors.

In re­turn for the au­tomak­ers’ con­tri­bu­tion, a com­mit­tee of in­jured driv­ers dropped their ob­jec­tion to TK Hold­ings’ pro­posed bankruptcy exit plan. The plan will be pre­sented to a US judge on Fri­day for ap­proval.

Vic­tims of the faulty in­fla­tors will also be able to col­lect from a sep­a­rate $125 mil­lion com­pen­sa­tion fund cre­ated as part of a plea deal Takata en­tered with the US Depart­ment of Jus­tice early last year. As part of that plea, au­tomak­ers will re­ceive their share of an $850-mil­lion resti­tu­tion fund.

Rice said funds from the Jus­tice Depart­ment set­tle­ment and the bankruptcy are likely to fall short of full com­pen­sa­tion for in­jured driv­ers, but they will still be able to sue the car man­u­fac­tur­ers.

The one ex­cep­tion is Honda Mo­tor Co., which agreed to cre­ate a trust to en­sure in­juries linked to its ve­hi­cles will be com­pen­sated in full, ac­cord­ing to Rice. He said Honda also will not con­test fault for the in­juries.

At least 22 deaths and hun­dreds of in­juries world­wide are linked to the Takata in­fla­tors.

Honda has faced the great­est num­ber of air bag-re­lated claims of the au­tomak­ers, and 20 of the deaths have oc­curred in Honda ve­hi­cles, most of which were in the United States. In re­turn for fund­ing the trust, Honda will be shielded from fur­ther law­suits. That also means it will not face the risk of puni­tive dam­ages.

Honda has said it was a vic­tim of de­cep­tion by Takata, and noted in a state­ment Tues­day that the $850-mil­lion fund cre­ated as part of the plea deal was meant to com­pen­sate au­tomak­ers for Takata’s scheme.

Honda said it is com­mit­ted to swiftly and fully com­pen­sat­ing those in­jured caused by de­fec­tive in­fla­tors in its ve­hi­cles, ac­cord­ing to the state­ment, and said claimants could still opt into the court sys­tem.

The 12 other car­mak­ers that were in­volved in the set­tle­ment, in­clud­ing Ford Mo­tor Co., Toy­ota Mo­tor Co., Gen­eral Mo­tors Co. and Volk­swa­gen AG have 18 months to opt into the trust, if they agree to com­pen­sate driv­ers in full.

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