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  06/26/2017 Despite Takata bankrtupcy, AG continues to urge car owners to repair defective airbags and to hold Takata accountable  

ST. THOMAS, V.I. – Attorney General Claude Earl Walker has vowed to continue seeking relief for Virgin Islands’ consumers affected by Takata airbags.

            In May 2016, the DOJ filed a complaint and motion for preliminary injunction against Takata, which manufactured and sold dangerous airbags that were installed in Toyota, Nissan, Ford and Honda vehicles.  That case had been on hold, awaiting an initial decision from the court on whether the government may proceed.

On June 19, the parties appeared before V.I. Superior Court Judge Michael Dunston for an emergency hearing during which the government asked the court to impose a preliminary injunction against Takata, which filed for bankruptcy today, and order the company to set aside a sum of money in escrow to be awarded to Virgin Islands consumers impacted by the faulty airbags.

The court requested – and was provided with – further evidence regarding the methodology the court should employ in the calculation of sum for court escrow, as well as the irreparable harm factor of the preliminary injunction balancing test.

Following the government’s emergency request for expedited ruling on its motion for preliminary injunction and supplemental evidence and information and after reports from various sources that Takata Corp. and TK Holdings, Inc. will file for bankruptcy today, Judge Dunston handed down his ruling, ordering Takata Corporation and TK Holdings to set aside more than $8 million for Virgin Islands consumers affected by Takata airbags.

            “This litigation was filed over a year ago to enforce Virgin Islands laws protecting public health, welfare and safety, especially for the thousands of Virgin Islands car owners and their families whose vehicles have been installed with defective airbags because of these four undeniable facts:  first, nationwide, more than 100 Takata airbags have exploded violently, sending shrapnel throughout the vehicles; second, we know of at least one such incident on St. Croix; third, at least 10 deaths have occurred in the United States; and fourth, Takata airbags develop problems most quickly in areas with high humidity and high temperatures, like the Virgin Islands,” AG Walker said. “Takata’s bankruptcy filing should not impact DOJ’s prosecution of its case against Takata on behalf of consumers because an exception to the rule automatically staying cases against bankrupt entities permits government police powers actions to proceed.  Otherwise, bankruptcy court would become a safe haven for corporations seeking relief from law enforcement.  We intend, also, to vigorously enforce Judge Dunston’s order directing Takata’s U.S. subsidiary to escrow funds to ensure relief for, and the safety of, Virgin Islands’ consumers.” 

In his ruling dated June 25, Judge Dunston ordered that “TK Holdings should escrow the sum of $3 million for civil penalties for conduct constituting a violation of CICO; TK Holdings should escrow the sum of $1,088,457 for disgorgement for conduct constituting a violation of CICO; TK Holdings should escrow the sum of $1 million for outreach to consumers for conduct constituting a violation of CICO; and TK Holdings should escrow the sum of $2,976,250 for out-of-pocket expenses for Virgin Islands consumers.”

In total, the sum to be escrowed by TK Holdings, Inc., should be $8,064,707, which shall be held in an interest-bearing account by the clerk of the court, Judge Dunston further ruled.

According to news reports, Takata filed for bankruptcy protection in the United States and Japan.  Takata Corp., the parent company, filed for bankruptcy protection with the Tokyo District Court early Monday morning, while its U.S. subsidiary, TK Holdings, filed Chapter 11 bankruptcy in Delaware on Sunday.  Its liabilities exceed $10 billion.

At a hearing held Monday morning to clarify matters regarding the government’s action against Takata, Deputy Attorney General Carol Thomas-Jacobs asked the court to order Takata to deposit the funds into an interest-bearing account for Virgin Islands consumers despite an automatic stay that came into effect once the company filed for bankruptcy.

“Takata had an obligation to deposit these funds,” Dep. AG Thomas-Jacobs said.

Judge Dunston, however, told the parties that whether his order survives the automatic stay is a matter to be determined in the bankruptcy court.

 Currently, there are 11,905 vehicles in the Virgin Islands outfitted with Takata airbags, of which approximately 2,519 or 21% were manufactured by Honda and the affected vehicles contain about 18,140 recalled airbags.

In spite of Takata’s action for bankruptcy protection, AG Walker urges vehicle owners to repair their defective airbags and to hold Takata responsible.


  Despite Takata bankrtupcy, AG continues to urge car owners to repair defective airbags and to hold Takata accountable.pdf