States get $650 million claim against Takata unit in airbag settlement

By Caroline Salls

Pittsburgh, Feb. 15 – Takata Corp. subsidiary TK Holdings Inc. requested court approval of a settlement reached with the attorneys general of 45 states to resolve consumer protection claims filed in connection with phase-stabilized ammonium nitrate (PSAN) airbag inflator defects, according to a motion filed with the U.S. Bankruptcy Court for the District of Delaware.

The company said the proposed settlement also will conclude an investigation being conducted by the Attorneys General Multistate Working Group (MSWG).

TK Holdings said many of the states have filed state consumer protection proofs of claim, “and other states might file and seek approval of late-filed proofs of claim in the Chapter 11 cases” that allow the filing of civil claims, damages, restitution, fines, costs and penalties “arising from or related to the design, engineering, manufacturing, marketing, sale, or maintenance of PSAN inflators, their component parts, or the airbag systems in which they are or were incorporated.”

Under the settlement, the states will be collectively granted a $650 million subordinated claim against TK Holdings for a civil penalty.

Also under the agreement, TK Holdings will not advertise or promote “in way that is false, deceptive or misleading its airbag systems and the safety of those systems and their components.”

No claim of safety of the systems may be made unless the claim is “supported by competent and reliable scientific or engineering evidence,” the motion said.

In addition, TK Holdings must not falsify or manipulate any testing data or provide data that it knows is inaccurate.

The company must also comply with state and federal law, the Motor Vehicle Safety Act and NHTSA consent and coordinated remedy orders and must continue to cooperate with original equipment manufacturers and alternative inflator suppliers to ensure that replacement inflators are made available as quickly as possible.

The settlement also requires TK Holdings to discontinue production of PSAN airbags.

As the lead state of the MSWG, South Carolina will be granted a $139,349 administrative expense claim.

A hearing is scheduled for March 13.

Tokyo-based Takata manufactures and sells motor vehicle seat belts, airbags, steering wheels, interior trims and child restraint systems. TK Holdings filed for bankruptcy on June 25, 2017 under Chapter 11 case number 17-11375.

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