Takata Corp’s U.S. unit reached a settlement with its lenders, attorneys for those hurt by its deadly air bags and automakers that eases the way to end its Chapter 11 bankruptcy and offer its viable operations, according to court documents.
The Japanese company’s air bags can blow up with excessive force and have been connected to at least 21 deaths and numerous injuries, prompting the biggest recall in automobile history and forcing Takata and its U.S. unit, TK Holdings Inc, into bankruptcy.
The U.S. unit was preparing for a court fight beginning 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.
However those two committees, automakers and Key Safety Systems, which is obtaining the feasible business lines of Takata, reached a deal that resolves the greatest objections to the plan, according to court documents submitted on Saturday.
Under the contract, 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 giving up a few of their claims against Takata.
The 13 automakers which joined the contract consist of General Motors, Ford Motor, Toyota Motor, and the United States affiliates of Honda Motor and Volkswagen AG.
A modified strategy of reorganization will be submitted with the United States Bankruptcy Court soon, according to Takata’s U.S. unit.
Tuesday’s court hearing was adjourned to Thursday at the earliest, Takata’s U.S. unit stated in court documents submitted on Sunday.
A spokesman for the U.S. unit and legal representatives for the committee of injured drivers did not immediately react to a request for discussion.
The trust will pay compensation based on the injury, varying from $10,000 for bruising to $5 million for death or loss of eyesight, according to court documents.