The largest auto industry recall in history

The recall of millions of automobiles equipped with defective airbag inflators manufactured by Takata Corp. was called “the largest and most complex safety recall in U.S. history” by the National Highway Traffic Safety Administration. The automotive industry is still reeling from the impact.

Although the first recall was initiated in 2008 by Honda, the onslaught began in May 2015, when Takata admitted that previous studies the company had conducted (but not released) revealed that the inflator was defective. That disclosure triggered approximately 22 million recalls that year alone, and has remained a central tenet in the legal proceedings to this day, including thousands of personal injury and wrongful death class actions and suits aimed at recovering economic damages for the more than 55 car manufacturers, or original equipment manufacturers (OEMs).

Kramer Levin is representing Subaru and Mazda, two of 15 OEMs spearheading a restructuring transaction of Takata’s seatbelt, sensor and other non-recalled business lines while providing for continued warehousing, shipping and disposal of recalled inflators globally. We have played a key role in some of the largest automotive industry bankruptcies, including those of General Motors Corp., Chrysler LLC and Dana Corp. Even by those standards, Takata is exceedingly complex.

In April 2018, Takata sold its business for $1.59 billion. A truly global transaction, it required the support of the car manufacturers that had purchased Takata inflators across Asia, EMEA and the Americas. The transaction and the restructurings provide meaningful recoveries to the OEMs, the tort claimants, governmental entities and unsecured creditors.

Our representation of Subaru and Mazda together helped both manufacturers realize an influential voice at the table for the midsize OEMs. We served as an honest broker among the OEMs, helping to build consensus among Takata, the buyer, the committees and other case constituents and drive toward a mutually acceptable position — one designed to ensure the continuity of a business that to many observers, and for many years, has seemed doomed to fail.