Takata Corp’s U.S. unit has reached a settlement with its creditors, lawyers for victims injured by its deadly air bags and automakers that paves the way to end its Chapter 11 bankruptcy and sell its viable operations, according to court papers.
The Japanese company’s air bags can explode with too much force and have been linked to at least 21 deaths and hundreds of injuries, prompting the largest recall in automotive history and forcing Takata and its U.S. unit, TK Holdings Inc, into bankruptcy.
The U.S. unit was gearing up for a court fight starting on Tuesday to get approval for its plan to exit bankruptcy over the opposition of a committee for injured drivers and a separate committee of unsecured creditors.
But those two committees, automakers and Key Safety Systems, which is acquiring the viable business lines of Takata, reached a deal that resolves the biggest objections to the plan, according to court documents sighted on Saturday.
Under the agreement, a trust will be established to pay compensation for those injured or killed by the air bags, which will be funded in part by automakers surrendering some of their claims against Takata.
The 13 automakers which joined the agreement include General Motors Co, Ford Motor Co, Toyota Motor Corp, and the U.S. affiliates of Honda Motor Co Ltd and Volkswagen .
Tuesday’s court hearing had been adjourned to Thursday at the earliest, Takata’s U.S. unit said in court papers filed on Sunday.
A spokesman for the U.S. unit and lawyers for the committee of injured drivers did not immediately respond to a request for comment.
The trust will pay compensation based on the injury, ranging from $10,000 for bruising to $5 million for death or loss of eyesight, according to court documents.
If the agreement is approved by the Bankruptcy Court in Wilmington, Delaware, injured drivers will be prevented from suing the automakers that joined the agreement.
A lawyer appointed to represent future injured drivers also joined the settlement, as did Key Safety Systems, a unit of China’s Ningo Joyson Electric Corp.
Key Safety Systems plans to acquire Takata’s viable operations for US$1.6 billion. The proceeds will fund restitution claims for automakers and help pay injury claims as part of a plea deal with the U.S. Department of Justice.