Troubled airbag supplier Takata has agreed a complex US federal court $1bn settlement with a judge noting he approved the figure because bankrupting the supplier would not be in other parties' best interests.
According to Reuters, US District Court Judge George Steeh approved the previously agreed settlement, despite objections from lawyers representing victims of Takata inflator explosions who said the criminal settlement identified automakers as victims of fraudulent activity.
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Steeh reportedly said automakers could be victims of Takata's decisions to hide evidence over 15 years that its inflators were defective and still be subject to civil litigation for harm done to individuals.
With the criminal settlement and penalties set, Takata is expected to intensify its search for a buyer or financial backer, Reuters noted.
The judge said he had considered a tougher as federal guidelines allowed for fines of up to $1.5bn. But he added he approved the settlement because Takata could otherwise be pushed into bankruptcy, delaying efforts to replace millions of potentially deadly inflators still on the road.
"Destruction of the corporation would probably have been a fair outcome in this case," Steeh said, adding he had been involved in a separate case in which Takata had admitted to price fixing.
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By GlobalDataVarious automakers could face costs to replace all defective airbags "that would be five, six or nine times the US$850m" set aside in the fund, Steeh said, according to Reuters. He indicated the total replacement cost could be more than $7.6bn. The Takata airbag recall is the largest ever for the auto industry.
Yoichiro Nomura, Takata's chief financial officer, appeared in court to formally accept the plea agreement.
"I would like to sincerely apologise on behalf of Takata," he said.
A person briefed on likely financial backers for Takata told Reuters this week a decision may be reached by the end of March.
he report said Takata had denied investor speculation it would need some form of bankruptcy protection in the United States or Japan. However, during the court hearing, Steeh and lawyers for the Justice Department alluded to potential for Takata to collapse if it could not find a buyer.
As part of the agreement with U.S. authorities, Takata has agreed to pay a $25m fine and has 30 days to pay $125m for victim compensation.
The supplier has up to a year to deliver the remaining $850m for automaker compensation. If a financial backer takes control of Takata, however, the money for the automakers must be delivered within five days, Reuters noted.
Steeh said he would decide who should manage the compensation funds after considering proposals from potential candidates.
Previous coverage of the largest recall in history
Find out more about Takata and airbags in just-auto's research database QUBE
