Sunday, January 15, 2017

Takata Deal Parties Ask for Special Master

Last week, the U.S. Attorney in Detroit announced Takata Corporation agreed to plead guilty to wire fraud and pay $1 billion in penalties stemming from the company’s fraudulent conduct related to sales of defective air bag inflators. The federal prosecutor said automotive suppliers who sell products that are supposed to protect consumers from injury or death must put safety ahead of profits. Under the terms of the agreement, which is subject to court approval, Takata pleaded guilty for falsifying testing data and reports that were provided to automakers. Takata will pay a criminal fine of $25 million and establish a $125 million restitution fund for individuals who suffered or will suffer personal injury caused by the malfunction of a Takata airbag inflator, and who have not already resolved their claims. In addition, Takata will establish an $850 million restitution fund for the benefit of automakers who received falsified testing data and reports or who have purchased airbag inflators from Takata containing phase-stabilized ammonium nitrate. The deal includes appointment of an independent monitor, who will report to the Justice Department and monitor Takata’s compliance with its legal and ethical obligations. The parties asked the federal judge to appoint mediator Kenneth Feinberg as a special master to distribute restitution payments. He handled restitution funds in the General Motors ignition switch and BP oil spill cases, among others. Payments to individuals must be made soon and automakers must be paid within five days of Takata's anticipated sale or merger. Takata is expected to be sold to another auto supplier or investor sometime this year. See more in stories here-- and and press release--