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Case 17-11375-BLS Doc 288 Filed 07/20/17 Page 1 of 13

UNITED STATES BANKRUPTCY COURT


DISTRICT OF DELAWARE
------------------------------------------------------x
:
In re : Chapter 11
:
TK HOLDINGS INC., et al., : Case No. 17-11375 (BLS)
: Jointly Administered
Debtors.1 :
: Objection Deadline: August 3, 2017 at
: 4:00 p.m. (ET)
: Hearing Date: August 10, 2017 at
: 2:30 p.m. (ET)
------------------------------------------------------x
DEBTORS MOTION FOR AN ORDER APPOINTING ROGER FRANKEL AS
LEGAL REPRESENTATIVE FOR FUTURE PERSONAL INJURY CLAIMANTS
NUNC PRO TUNC TO JULY 20, 2017

TK Holdings Inc. (TKH) and its affiliated debtors in the above-captioned

chapter 11 cases (the Chapter 11 Cases), as debtors and debtors in possession

(collectively, the Debtors), respectfully represent as follows in support of this motion

(the Motion):

Relief Requested

1. By this Motion, pursuant to sections 105 and 1109 of title 11 of the

United States Code (the Bankruptcy Code), the Debtors request that the Bankruptcy

Court (the Court) enter an order, substantially in the form annexed hereto as Exhibit A

(the Proposed Order), appointing Roger Frankel (Mr. Frankel) as the legal

representative for individuals who sustain personal injuries after confirmation of a

chapter 11 plan of reorganization in these Chapter 11 Cases, arising from or related to

1
The Debtors in these chapter 11 cases, along with the last four digits of each Debtors federal tax
identification number, as applicable, are: Takata Americas (9766); TK Finance, LLC (2753); TK China,
LLC (1312); TK Holdings Inc. (3416); Takata Protection Systems Inc. (3881); Interiors in Flight Inc.
(4046); TK Mexico Inc. (8331); TK Mexico LLC (9029); TK Holdings de Mexico, S. de R.L. de C.V.
(N/A); Industrias Irvin de Mexico, S.A. de C.V. (N/A); Takata de Mexico, S.A. de C.V. (N/A); and
Strosshe-Mex, S. de R.L. de C.V. (N/A). Except as otherwise set forth herein, the Debtors international
affiliates and subsidiaries are not debtors in these chapter 11 cases. The location of the Debtors corporate
headquarters is 2500 Takata Drive, Auburn Hills, Michigan 48326.
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PSAN Inflators manufactured by the Debtors prior to confirmation of a chapter 11 plan of

reorganization in these Chapter 11 Cases (Future Claimants), subject to the terms

described below (the Future Claimants Representative), nunc pro tunc to July 20,

2017.

2. In support of this Motion, the Debtors submit the declaration of

Mr. Frankel, which is attached hereto as Exhibit B (the Frankel Declaration).

Jurisdiction

3. The Court has jurisdiction to consider this matter pursuant to

28 U.S.C. 157 and 1334, and the Amended Standing Order of Reference from the

United States District Court for the District of Delaware, dated February 29, 2012. This

is a core proceeding pursuant to 28 U.S.C. 157(b) and, pursuant to Rule 90131(f) of

the Local Rules of Bankruptcy Practice and Procedure of the United States Bankruptcy

Court for the District of Delaware (the Local Rules), the Debtors consent to the entry

of a final order by the Court in connection with this Motion to the extent that it is later

determined that the Court, absent consent of the parties, cannot enter final orders or

judgments consistent with Article III of the United States Constitution. Venue is proper

before the Court pursuant to 28 U.S.C. 1408 and 1409.

Background

4. On June 25, 2017 (the Petition Date), each of the Debtors

commenced with this Court a voluntary case under chapter 11 of the Bankruptcy Code.

The Debtors continue to operate their businesses and manage their properties as debtors

in possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code. On July 7,

2017, the United States Trustee for Region 3 filed notices appointing the statutory

committee of unsecured trade creditors pursuant to section 1102(a)(1) of the Bankruptcy


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Code (Creditors Committee) and the statutory committee of unsecured tort claimant

creditors pursuant to section 1102(a)(2) of the Bankruptcy Code (Tort Claimants

Committee and together with the Creditors Committee, the Committees).

5. The Debtors Chapter 11 Cases have been jointly administered for

procedural purposes only pursuant to Rule 1015(b) of the Federal Rules of Bankruptcy

Procedure (the Bankruptcy Rules) and Local Rule 1015-1.

6. On the Petition Date, in coordination with the commencement of

the Chapter 11 Cases, Takata Corporation, the Debtors ultimate corporate parent

(TKJP and, together with its direct and indirect global subsidiaries, including TKH,

Takata), together with Takata Kyushi K.K. and Takata Service Corporation,

commenced civil rehabilitation proceedings under the Civil Rehabilitation Act of Japan

in the 20th Department of the Civil Division of the Tokyo District Court. On June 28,

2017, the Debtors also commenced an ancillary proceeding under the Companies

Creditors Arrangement Act (Canada), R.S.C. 1985, c. C-36 as amended (the CCAA) in

the Ontario Superior Court of Justice (Commercial List) (the Canadian Court) in

Ontario, Canada.

7. Additional information regarding the circumstances leading to the

commencement of these Chapter 11 Cases and information regarding the Debtors

businesses and capital structure is set forth in the Declaration of Scott E. Caudill in

Support of Debtors Chapter 11 Petitions and First Day Relief, dated June 25, 2017

[Docket No. 19] (the Caudill Declaration).2

Basis for Relief

2
Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in
the Caudill Declaration.
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8. Statutory authority and precedent support the appointment of a

future claims representative to protect the interests of future claimants in chapter 11. See

e.g., In re Motors Liquidation Company, No. 09-50026 (Bankr. S.D.N.Y. April 8, 2010)

(granting, pursuant to sections 105(a) and 1109, the debtors motion to appoint a future

claimants representative to resolve future asbestos claims outside of the section 524(g)

framework); In re Met-Coil Sys. Corp., No. 03-12676, (Bankr. D. Del. Oct. 20, 2003)

(appointing future claimants representative to represent holders of future

trichloroethylene-related personal injury claims); In re CBC Framing, Inc., No. 09-20610

(Bankr. C.D. Cal. 2010) (appointment of future claimants representative to represent

holders of claims related to pre-confirmation nexus with the debtor, the largest framing

contractor in California); In re Roman Catholic Archbishop of Portland in Oregon, No.

04-37154 (Bankr. D. Ore. Dec. 20, 2004) (granting, pursuant to section 327 of the

Bankruptcy Code, the debtors motion to appoint a future claimants representative to

resolve future child abuse claims).

A. The Debtors Need for a Future Claimants Representative

9. The Debtors personal injury liabilities arise from their

manufacture and sale of certain airbag inflators. The rupture of certain Takata-

manufactured airbag inflators containing phase-stabilized ammonium nitrate (the PSAN

Inflators) prompted the National Highway Traffic Safety Administration (NHTSA),

and several major original equipment manufacturers (OEMs) to take actions to initiate

wide-ranging recalls of vehicles in the U.S. and overseas. After commissioning three

independent research organizations to administer scientific evaluations and report on the

root cause of the ruptures, NHTSA concluded that at some point in the future, all non-
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desiccated frontal Takata PSAN Inflators will reach a threshold level of degradation that

could result in the inflator becoming unreasonably dangerous. Takata also recently filed

with NHTSA, Defect Information Reports relating to PSAN inflators in the United States

that were desiccated with calcium sulfate. As a result, in addition to facing significant

current litigation relating to airbags containing non-desiccated PSAN Inflators including,

without limitation, personal injury and wrongful death claims, economic loss class action

claims, and deceptive trade practice claims brought by various state governmental

agencies, the Debtors anticipate there will be additional claims of this nature asserted in

the future.

10. The Debtors commenced these Chapter 11 Cases, among other

things, to obtain a comprehensive and permanent resolution of their airbag inflator-

related liability. Accordingly, the Debtors intend to focus their efforts on negotiating,

and ultimately obtaining approval of, a plan of reorganization that would, among other

things, channel personal injury and wrongful death claims relating to the Debtors pre-

confirmation manufacture of PSAN Inflators to a trust funded by the Debtors to

compensate such claimants.

11. The Debtors recognize that in so doing, potential conflicts exist

between the interests of current claimants and the Future Claimants; i.e., the desire of

current claimants to receive the maximum satisfaction on account of their current claims

now versus the preference of Future Claimants to preserve a portion of the Debtors

assets in order to satisfy their future personal injury claims. Accordingly, to ensure that

Future Claimants are adequately and fairly represented, the Debtors request that Mr.

Frankel be appointed to represent the interests of Future Claimants and act as an


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independent fiduciary to represent and protect those claimants interests with regard to

the treatment of future personal injury and wrongful death claims in the Debtors

reorganization proceedings.3

B. Mr. Frankels Qualifications

12. The Debtors, with the assistance of their counsel, have evaluated

several potential candidates to serve as the Future Claimants Representative in these

Chapter 11 Cases. Following careful consideration of the potential candidates, the

Debtors have determined, in their sound business judgment, that Mr. Frankel is well-

qualified to represent the interests of the Future Claimants.

13. As set forth in the Frankel Declaration, Mr. Frankel has extensive

experience in the field of mass tort bankruptcy matters and has served as a future

claimants representative in other chapter 11 cases as well as counsel to other future

claimants representatives.

14. Mr. Frankel is a graduate of the George Washington University

Law School. He has practiced in the areas of business reorganization and creditors rights

since 1972. For the past seventeen years, Mr. Frankel has represented clients in

connection with complex, mass tort related bankruptcy cases, including representing

future claimants representatives in the same. See Frankel Declaration at 6.

15. Mr. Frankel also serves as a future claimants representative in

other cases. He was appointed by the United States Bankruptcy Court for the District of

Delaware as the Legal Representative for holders of future personal injury asbestos

3
For the avoidance of doubt, nothing in this Motion should be construed to imply that the personal injury
or wrongful death claims of the Future Claimants are not claims as defined in the Bankruptcy Code
section 101(5).
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claims in the Chapter 11 cases of W.R. Grace & Co., et al., Case No. 01-01139 (Bankr.

D. Del.) and now holds that position with the trust established pursuant to the confirmed

plan in those cases. Id. at 6(a). He also serves as the Legal Representative for holders of

future personal injury asbestos claims with respect to the trust established pursuant to the

confirmed plan in Combustion Engineering, et al., Case No. 03-10495 (Bankr. D. Del.).

Id. at 6(b).

16. Mr. Frankel is a founding partner in the law firm of Frankel Wyron

LLP. Id. at 1. Previously, Mr. Frankel was a partner at Orrick, Herrington & Sutcliffe

LLP (Orrick) and co-chair of Orrick's Global Restructuring Group. Id. at 5. As noted

above and in the Frankel Declaration, Mr. Frankel has served as legal counsel to future

claimants representatives, and serves as the future claimants representative in a number

of chapter 11 cases involving personal injuries. See id. at 6(a-d).

17. The Debtors believe that Mr. Frankels many years of

experience and involvement with mass tort related personal injury claims in

bankruptcy cases, as well as his experience as a future claimants representative in

other chapter 11 cases, make him well qualified to competently and effectively

represent the interests of the Future Claimants.

C. Disinterestedness

18. To the best of the Debtors' knowledge, and as described more fully

in the Frankel Declaration, Mr. Frankel is a "disinterested person" within the meaning of

section 101(14) of the Bankruptcy Code and as required by section 327(a) of the

Bankruptcy Code and referenced by section 328(c) of the Bankruptcy Code. Mr. Frankel

holds no interest adverse to the Debtors or their estates for the matters for which he
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would be employed. Additionally, Mr. Frankel has no connection, other than that

disclosed above and in the Frankel Declaration, to the Debtors, their creditors, or any

other party in interest.

D. Terms of Mr. Frankels Appointment as Future Claimants Representative

19. The Debtors request the entry of the Order appointing Mr. Frankel

as the Future Claimants Representative under the following terms:

a. Standing The Future Claimants Representative shall

have standing under section 1109(b) of the Bankruptcy Code to be heard as a party-in-

interest in all matters relating to the Debtors Chapter 11 Cases, and shall have, inter

alia, the powers and duties of a committee, which powers and duties may be modified

by order of the Court at any time during these Chapter 11 Cases.

b. Engagement of Professionals The Future Claimants

Representative may employ attorneys, and other professionals, consistent with section

1103 of the Bankruptcy Code. All attorneys who have been or are hereafter retained

pursuant to sections 327 or 1103 of the Bankruptcy Code (i) shall apply for

compensation for professional services rendered and reimbursement of expenses

incurred in connection with the Debtors chapter 11 cases in compliance with sections

330 and 331 of the Bankruptcy Code and applicable provisions of the Bankruptcy Rules,

Local Rules and any other applicable procedures and orders of the Court, and (ii) intend

to make a reasonable effort to comply with the U.S. Trustees requests for information

and additional disclosures as set forth in the Guidelines for Reviewing Applications for

Compensation and Reimbursement of Expenses Filed under 11 U.S.C. 330 by

Attorneys in Larger Chapter 11 Cases Effective as of November 1, 2013.


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c. Compensation Compensation, including professional fees

and reimbursement of expenses, shall be payable to the Future Claimants

Representative and his professionals from the Debtors estates, subject to approval by

this Court and subject to the Bankruptcy Code, the Bankruptcy Rules, and the Local

Rules and Orders of this Court entered in these Chapter 11 cases. The Debtors and Mr.

Frankel have agreed, subject to this Courts approval, that Mr. Frankel shall be

compensated at the rate of $995 per hour (subject to adjustment as provided in the

Frankel Declaration).

d. Liability Indemnity of Future Claimants Representative

The Future Claimants Representative shall not be liable for any damages, or have any

obligations other than as prescribed by Orders of this Court; provided, however, that the

Future Claimants Representative may be liable for damages caused by his willful

misconduct or gross negligence. The Future Claimants Representative shall not be

liable to any person as a result of any action or omission taken or made by the Future

Claimants' Representative in good faith. The Debtors shall indemnify, defend and hold

the Future Claimants' Representative and his agents and professionals harmless from any

claims by any party against the Future Claimants Representative arising out of or

relating to the performance of his duties as Future Claimants Representative,

provided however, that the Future Claimants Representatives (and his agents and

professionals) shall not have such indemnification rights if a court of competent

jurisdiction determines pursuant to a final and order no longer subject to appeal that the

Future Claimants Representative is liable upon such claim as a result of willful

misconduct or gross negligence. If, before the earlier of: (i) the entry of an order
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confirming a chapter 11 plan in these Chapter 11 Cases (that order having become a

final order and no longer subject to appeal), and (ii) entry of an order closing these

Chapter 11 Cases, the Future Claimants Representative believes that he is entitled to

payment of any amounts by the Debtors on account of the Debtors' indemnification,

contribution and/or reimbursement obligations under an order approving this Motion,

including without limitation the advancement of defense costs, the Future Claimants

Representative must file an application therefor in this Court, and the Debtors may not

pay any such amounts to the Future Claimants Representative before the entry of an

order by this Court approving such payment. The preceding sentence is intended to

specify the period of time during which this Court shall have jurisdiction over any

request for fees and expenses by the Future Claimants Representative for

indemnification, contribution or reimbursement and is not a limitation on the duration of

the Debtors' obligation to indemnify the Future Claimants Representative. In the event

that a cause of action is asserted against the Future Claimants Representative arising out

of or relating to the performance of his duties as Future Claimants Representative, the

Future Claimants Representative shall have the right to choose his own counsel.

e. Right To Receive Notices The Future Claimants

Representative and his counsel shall be entitled to receive all notices and pleadings

which are served upon the Committees and their respective counsel pursuant to the

Bankruptcy Code, the Bankruptcy Rules, and any and all orders entered in these Chapter

11 Cases, including, without limitation any and all orders authorizing the Debtors to

obtain post-petition financing.


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20. As described above, the Debtors submit that the appointment of

Mr. Frankel and the terms of his compensation are fair and reasonable. In addition, such

appointment will assure that the interests of Future Claimants are appropriately

represented and should serve to expedite the proper administration of these estates.

Appointment of the Future Claimants Representative Nunc Pro Tunc to the July
20, 2017

21. The Debtors respectfully request that Mr. Frankels appointment

be made effective nunc pro tunc to the date this Motion is filed so that Mr. Frankel may

be compensated for the services he provides before this Motion is decided by the

Court. It is well established that a bankruptcy court has the power to grant retroactive

approval of employment of a professional in a chapter 11 case. See, e.g., In re Arkansas

Co., Inc., 798 F. 2d 645, 648 (3d Cir. 1986); In re Primary Health Sys. Inc., 2002 WL

500567 (D. Del. Mar. 28, 2002). In determining whether the court should exercise its

discretion to grant retroactive approval, the bankruptcy court must find that it would have

granted prior approval pursuant to the relevant requirements, and may consider additional

factors such as: (1) whether the professional was under time pressure to begin service

without approval; (2) the amount of delay; and (3) the extent to which compensation to

the professional will prejudice innocent third parties. In re Arkansas Co., Inc., 798 F. 2d

at 650.

22. The engagement of Mr. Frankel to act as the Future Claimants

Representative nun pro tunc to the date this Motion is filed is warranted here. No

legitimate basis would be served by delaying Mr. Frankels work until his engagement is

approved. Indeed, it is critical that Mr. Frankel immediately become familiar with the key
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issues in this case and retain the necessary professionals to carry out his work. Finally, no

party in interest will be prejudiced by the granting the appointment nunc pro tunc.

Notice

23. Notice of this Motion has been provided to (i) the Office of the

United States Trustee for the District of Delaware (Attn: David Buchbinder, Esq. and

Jane Leamy,Esq.); (ii) the Securities and Exchange Commission; (iii) the Internal

Revenue Service; (iv) the Offices of the United States Attorney for each of the District of

Delaware and the Eastern District of Michigan; (v) NHTSA; (vi) each of the Consenting

OEMs; (vii) the Plan Sponsor; (viii) counsel for each of the Committees; and (ix) all

parties who have requested service of notices in these Chapter 11 Cases pursuant to

Bankruptcy Rule 2002. The Debtors submit that such notice is sufficient under the

circumstances.

No Previous Request

24. No previous request for the relief sought herein has been made by

the Debtors to this or any other court.


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WHEREFORE the Debtors respectfully request entry of the Proposed

Order granting the relief requested herein and such other and further relief as the Court

may deem just and appropriate.

Dated: July 20, 2017


Wilmington, Delaware

/s/ Brett M. Haywood


RICHARDS, LAYTON & FINGER, P.A.
Mark D. Collins (No. 2981)
Michael J. Merchant (No. 3854)
Amanda R. Steele (No. 5530)
Brett M. Haywood (No. 6166)
One Rodney Square
920 N. King Street
Wilmington, Delaware 19801
Telephone: (302) 651-7700
Facsimile: (302) 651-7701

-and-

WEIL, GOTSHAL & MANGES LLP


Marcia L. Goldstein
Ronit J. Berkovich
Theodore E. Tsekerides
Konrad Cailteux
Matthew P. Goren
767 Fifth Avenue
New York, New York 10153
Telephone: (212) 310-8000
Facsimile: (212) 310-8007

Proposed Attorneys for the Debtors


and Debtors in Possession