Takata, U.S. government tangle over victim payments

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While Takata Corp. and the U.S. government have agreed how to divvy up $ 850 million in restitution payments to automakers, the two are still debating in court over which victims will receive the remaining $ 125 million.

The $ 975 million in restitution payments stem from the Japanese company’s faulty airbags, linked to hundreds of injuries and at least 21 deaths, that led to the largest recall in automotive history and forced Takata and its North American subsidiary, TK Holdings Inc., into bankruptcy.

The court-appointed special master who is doling out the settlement money, Eric Green, determined in a Jan. 2 ruling that the $ 125 million fund will be paid out to U.S. victims only. Green, a professor at Harvard Law School, was appointed to administer the settlement by U.S. District Court in Detroit.

Takata, however, has objected to the ruling, stating that the $ 850 million paid to automakers was not dictated by geography — nearly 60 manufacturers are splitting the fund, including Honda and Toyota — and that the plea agreement it reached in February 2017 did not preclude victims outside the U.S. from receiving payment, its lawyers said in a Jan. 11 court filing.

“The plea agreement contains no geographic or nationality limitation on coverage of injured individuals,” the court filing said. “Rather, the plain language is broad, and when considered in context of addressing Takata’s global conduct, supports inclusion of foreign individuals injured outside the United States.”

The U.S. government doesn’t believe the argument is substantive as Takata agreed to give the special master the ability to determine the fund’s recipients, it said in a Feb. 1 response.

Oral arguments on the issue are scheduled for March 5 in U.S. District Court in Detroit.

As part of the special master’s proposal, domestic automakers will split $ 189 million of the $ 850 million to settle their own claims with victims. General Motors is to receive $ 90 million, Fiat Chrysler Automobiles NV $ 53.8 million and Ford Motor Co. $ 45.3 million.

Key Safety Systems Inc. signed a definitive agreement in November to acquire Takata for $ 1.6 billion. Key Safety won a stalking horse bid to acquire the embattled Japanese supplier out of bankruptcy, for which Takata filed earlier this year.

Under the deal, Key Safety’s management vows to maintain Takata’s 45,000 employees, with the exception of its problematic ammonium nitrate airbag inflator business, which is expected to cease  operation after the sale.

Key Safety has said it expects to close on the deal by the end of the first quarter.

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