Takata Settlement Impacted by Bankruptcy

This week, 44 states and the District of Columbia agreed not to collect a $650-million deal to settle consumer protection claims so victims of Japanese airbag maker Takata Corp.'s faulty inflators can get a bigger piece of the company's remaining money. Takata was forced into bankruptcy last year amid lawsuits, multimillion-dollar fines and recall costs involving inflators that use explosive ammonium nitrate. The chemical propellant deteriorates over time when exposed to high heat and humidity and can then burn too fast, blowing apart its metal canister. Attorneys General for the states alleged that Takata concealed air bag issues and failed to disclose safety defects. Under this deal and a reorganization plan just approved by a federal bankruptcy judge in Delaware, Takata agreed not to represent its air bags as safe unless supported by scientific evidence, not to falsify any testing data, and to keep cooperating with automakers to make sure replacement inflators are available. It also agreed not to sell any airbags that use ammonium nitrate, unless for recall replacement parts. Some of the provisions already were included in an agreement with the National Highway Traffic Safety Administration. Takata had agreed under a DOJ plea to pay victims $125 million and to pay $850 million in restitution to automakers that bought its inflators and are stuck with recall and litigation costs. Under the restructuring plan, Takata will sell most of its non-air bag assets to a Chinese-owned rival for $1.6 billion. Reportedly, the airbag inflator problem touched off the largest automotive recall in U.S. history. Some 69 million inflators in the U.S. and another 60 million worldwide are being recalled, according to court documents and the National Highway Traffic Safety Administration. See more here-- http://lat.ms/2EO0McD

Madoff Mediation

Attorney General Kamala Harris of California and the liquidator of Bernard Madoff's defunct firm will mediate to pursue a settlement according to Manhattan U.S. Bankruptcy Judge Burton Lifland. Madoff trustee, Irving Picard, asked Judge Lifland to stop California's $270 million lawsuit against an alleged beneficiary of the Ponzi scheme, arguing that only the trustee can collect money for Madoff's victims. Harris contends her suit can proceed because she's using state police power to protect against consumer fraud. Interestingly, Picard did not protest when New York Attorney General Eric Schneiderman struck a $410 million settlement deal with Madoff feeder-fund operator Ezra Merkin. However, Picard sued Harris in January, alleging her lawsuit filed on behalf of Californians interferes with the collection of assets needed to help compensate Madoff victims. See story here - http://www.sfgate.com/business/article/Madoff-estate-lawsuit-goes-to-mediation-3717797.php