Kramer Levin represented two large original equipment manufacturers (OEMs), Subaru and Mazda, in connection with the global restructuring of Takata Corp., the Japanese automotive supplier subject to the largest recall in history for its faulty air bag inflators. The global restructuring included Chapter 11 cases and Chapter 15 cases in the U.S. Bankruptcy Court for the District of Delaware and an insolvency proceeding under the Civil Rehabilitation Act in the Tokyo District Court. Takata’s restructuring was precipitated by the recall that has impacted numerous OEMs, which were the debtors’ largest unsecured creditors and fraud victims, and consumers, who have suffered physical injuries or economic harm.
In early 2017, Takata settled with the Department of Justice and entered into a plea agreement in which it agreed to pay $1 billion to tort victims and the OEMs. Subaru and Mazda are part of a group of OEMs providing innovative bankruptcy funding to Takata through accelerated payables. Kramer Levin, on behalf of Subaru and Mazda, negotiated a transaction with a purchaser for Takata’s non-inflator business for approximately $1.6 billion and to ensure the continued supply of inflators for a period of time by the reorganized Takata that includes four purchase agreements, two RSAs, a Chapter 11 plan and an indemnity agreement.
Despite a contentious start to the case with various constituents, Kramer Levin was able to help negotiate global settlements of approximately $47 billion in recall and indemnification claims asserted by the automakers with the debtors, the tort committee, the creditors’ committee and the states, among other constituencies, leading to a largely consensual Chapter 11 plan. The plan was confirmed in February 2018 and the transaction was consummated in April 2018. Kramer Levin continues to represent Subaru and Mazda in connection with the transition to continued supply from Joyson Safety Systems and the ongoing obligations of reorganized Takata Holdings to provide limited warehouse, shipping and disposal services.