Milbank represented the Official Committee of Unsecured Creditors in the chapter 11 cases of TK Holdings Inc. and its affiliated debtors (the “Debtors”), which, together with their global affiliates (collectively “Takata”), was one of the world’s largest producers of automobile safety products. Several years ago, after defective airbags exploded causing injuries and deaths, numerous state and federal authorities began investigations that, ultimately, resulted in the largest automotive recall in history. The investigations also led to the imposition of well over $1 billion in criminal and civil penalties against Takata.
On June 25, 2017, the Debtors filed voluntary petitions under chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware, listing outstanding liabilities of approximately $10–50 billion and assets of approximately $1–10 billion. Immediately upon the filing, the Debtors announced that Takata had negotiated a sale of substantially all of its worldwide assets to an affiliate of Key Safety Systems (together with its affiliates, “KSS”), except for the business related to the defective airbags (the PSAN assets), which business is to continue as part of Reorganized Takata until the recall program is complete.
On February 16, 2018, the bankruptcy court confirmed the Debtors’ fifth amended plan of reorganization. On April 10, 2018, the global sale of the Takata enterprise to KSS closed and the Debtors’ plan was consummated.
As counsel to the Official Committee of Unsecured Creditors, whose members included five trade creditors, Milbank was instrumental in dramatically enhancing recoveries for general unsecured creditors and having most trade and service contracts assumed by KSS or by Reorganized Takata. In addition, Milbank was able to negotiate for an almost full recovery for creditors with non-contingent, liquidated claims, which creditors originally stood to receive nominal recoveries (ranging from .1% to .3%) under the Debtors’ initial plan of reorganization. This result was achieved through Milbank negotiating with the Debtors, KSS, representatives of the Original Equipment Manufacturers (the large automotive companies) and other parties in interest.
The Milbank team was led by Financial Restructuring partners Dennis Dunne, Abhilash Raval, and Tyson Lomazow and Financial Restructuring and Litigation partner Andrew Leblanc. Other Milbank team members instrumental to the transaction include special counsel Mary Doheny (Financial Restructuring), senior attorney Lena Mandel (Financial Restructuring) and associates Matthew Koch (Financial Restructuring), Robert Nussbaum (Financial Restructuring), Katie Rookard (Financial Restructuring), Melanie Yanez (Litigation), and Brian Zucco (Financial Restructuring).
