Scandal-plagued Takata Corp. reached an agreement this week with automakers and lawyers representing victims of explosive air bags that will speed the U.S. arm of the Japanese auto parts company toward a bankruptcy exit.
The agreement reached over the weekend represents a win for Takata’s bankruptcy lawyers at Weil, Gotshal & Manges led by business finance and restructuring partners Marcia Goldstein and Ronit Berkovich in New York.
The firm charged a bit more than $15 million for its work on the Chapter 11 case from August through December, according to court filings, with partners billing a blended rate of about $1,100 an hour and associates charging about $770 an hour. Richards, Layton & Finger, local Delaware counsel to Takata, has charged about $1.65 million for its services during the same six-month billing schedule.
Weil began representing TK Holdings Inc., the North American unit of the Tokyo-based air bag manufacturer, in August 2015, charging more than $19 million in fees leading up to the company’s June 2017 bankruptcy filing in Delaware and Tokyo.
The settlement over the weekend was reached between 13 automakers ranging from BMW Group to Honda Motor Co. Ltd. and plaintiff’s lawyers representing victims of Takata’s faulty air bags. It will set up a trust that will pay out victims through a claims process.
The trust is funded in part by sales of Takata’s viable business assets. Skadden, Arps, Slate, Meagher & Flom is advising Key Safety Systems Inc., a Sterling Heights, Michigan-based unit of Chinese auto supplier Ningbo Joyson Electric Corp., which has offered $1.588 billion to buy Takata’s non-inflator business.
The automakers have agreed to collectively contribute $130 million to the settlement in order to be indemnified from claims resulting from air bags under the agreement. The trust will pay out between $3 million and $5 million for deaths caused by the air bags, with other payments priced on the extent of the injuries, such as $10,000 for bruising or $25,000 for losing a tooth.
The faulty air bags have led to the biggest recall in automotive history. The National Highway Traffic Safety Administration expects 65 to 70 million air bags will be recalled by 2019. Honda states that the air bags have caused 13 deaths and 180 injuries in the U.S. alone. Reuters reports there have been 21 deaths.
A year ago, Takata agreed to pay $1 billion in criminal penalties to settle charges filed by the U.S. Department of Justice related to its defective air bags. A hearing is scheduled for Friday in the bankruptcy case of TK Holdings to confirm the company’s Chapter 11 exit plan.