Takata granted 90-day freeze on litigation, enforcement actions

posted on:
August 16, 2017


Takata Corporation has been granted a 90-day freeze on hundreds of lawsuits and government enforcement actions related to its defective airbags so it can focus on its restructuring under Chapter 11 bankruptcy.

Delaware bankruptcy judge Brendan L. Shannon, who is overseeing Takata’s bankruptcy proceedings in the U.S., said that “What [Takata] seeks is a breathing spell to focus on all of its stakeholders … The record supports that’s what is needed.”

Takata sought a temporary shield from the mounting number of wrongful death, personal injury, and economic loss complaints, including most of the multidistrict litigation (MDL) based in Florida, and government enforcement actions.

Takata already has automatic stay powers under its Chapter 11 filing, but it asked Judge Shannon to extend those protections to other defendants in the massive airbag litigation, including the automakers also named as defendants, who are funding Takata’s case, Law 360 reports.

BMW, Ford, Honda, and Toyota were among the major automakers that argued in favor of the freeze.

While Judge Shannon largely accommodated Takata’s request, he exempted the lawsuits consolidated for MDL in the Southern District of Florida from the freeze, saying that they essentially made up one case. The order also grants Takata and other defendants a 90-day freeze instead of the six months Takata had asked for, but the company could seek an extension if needed.

The pause gives Takata’s management time to focus on the completion of its $1.6-billion sale to a U.S, based Chinese competitor and to replace millions of defective airbag inflators covered by the largest auto safety recall in history.

According to Reuters, lawyers representing plaintiffs allegedly harmed by Takata airbags called the request to suspend litigation “an abuse of the bankruptcy laws for the benefit of all of the world’s largest automobile manufacturers.”

Reuters reported: “The official bankruptcy committee that represents injured drivers said in court papers the injunction would have ‘human consequences’ and prevent people from pursuing compensation.”


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