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Japanese auto supplier Takata Corp. filed for U.S. bankruptcy protection yesterday in an effort to pause lawsuits against the company over faulty air bag inflators — more than a month after its U.S. unit filed for bankruptcy in the same court, Reuters reported. In its filing with the U.S. Bankruptcy Court in Delaware, Takata said that the chapter 15 petition was critical to ensure the "continuation of Takata's business, preserving tens of thousands of jobs and ensuring that Takata's business partners continue to have access to critical components that ensure the safety of drivers worldwide." The petition came as Takata's U.S. business separately asked a federal bankruptcy judge to suspend lawsuits against automakers that have been brought by air bag victims. Major automakers including BMW AG, Ford Motor Co., Honda Motor Co Ltd. and Toyota Motor Corp. sided with Takata in backing a six-month delay in lawsuits. Takata and automakers face hundreds of lawsuits including actions brought by Hawaii, the U.S. Virgin Islands, and New Mexico.

Takata Corp.’s bankrupt U.S. business will ask a federal judge today to suspend lawsuits against automakers that have been brought by people injured by its faulty air bag inflators, something that opponents say is an abuse of the law, Reuters reported. Takata and TK Holdings Inc., the company's U.S. unit, filed for bankruptcy in June and said that they faced tens of billions of dollars in liabilities from its inflators, which are subject to the biggest recall in automotive history. Bankruptcy automatically stayed hundreds of lawsuits against TK Holdings for wrongful death, injuries, economic loss and breach of consumer protection laws. But in July the company sought a preliminary injunction to suspend lawsuits against automakers that use its inflators. Without the injunction, Takata said the litigation would distract management from completing the sale of the company's viable operations to Key Safety Systems for $1.6 billion and could threaten the supply of air bag inflators to replace recalled ones. Plaintiffs' lawyers called the requested injunction "an abuse of the bankruptcy laws for the benefit of all of the world's largest automobile manufacturers." They said that Takata's request would delay consideration of plaintiff's lawsuits for six months or more, which would be a very long time for the plaintiffs. The official bankruptcy committee that represents injured drivers said in court papers the injunction would have "human consequences" and prevent people from pursuing compensation.

The bankrupt Archdiocese of St. Paul and Minneapolis says that the latest reorganization plan proposed for the church by creditors would strip it of all assets required to pursue the church's mission, Minnesota Public Radio reported on Saturday. The archdiocese filed its objections to the creditors' plan on Friday and urged acceptance of its own $156 million settlement. The Twin Cities archdiocese filed for chapter 11 bankruptcy in January 2015, motivated by hundreds of claims of sex abuse against archdiocesan priests. The archdiocese says that to fulfill the creditors' demands, assets would include all cash and the cash value of property, including religious vestments and relics. Also included would be the church's financial stake as landlord in the Cathedral of St. Paul and two high schools.

A Republican-backed effort to overturn a rule making it easier for consumers to sue banks has hit a snag: the Senate, the Wall Street Journal reported today. At issue is a Consumer Financial Protection Bureau rule approved in July barring fine-print requirements that consumers use arbitration to resolve disputes over financial services. The rule makes it easier for consumers to join class-action lawsuits against banks and credit-card companies. Though fiercely fought by the financial industry, it is set to go into effect in March. CFPB Director Richard Cordray pressed ahead with the rule despite opposition from Trump administration banking officials and Republicans in Congress. Republican lawmakers are targeting the CFPB rule with a legislative tool known as the Congressional Review Act. It allows lawmakers to overturn a newly issued regulation on an expedited schedule with a simple majority vote in Congress. The House voted 231-190 to overturn the rule in July. The Senate plans to act in September when it returns from a long recess. However, support in the Senate is uncertain. No Democrats are likely to back the effort, and Republicans, with their slim majority, can’t afford to lose more than two GOP votes. Several Republican senators have expressed reservations about voting to overturn the regulation, worried they may be portrayed as siding with banks and against consumers.

Student loan giant Navient Corp. has suffered a pair of courtroom defeats in its attempt to block government lawsuits alleging the nation’s largest student debt company mistreated borrowers, Bloomberg News reported today. The losses come in a trio of lawsuits filed in January by the U.S. Consumer Financial Protection Bureau and state attorneys general of Washington and Illinois. They collectively allege Navient mistreated hundreds of thousands of student debtors by taking shortcuts to minimize its own costs, while adding what the CFPB said was as much as $4 billion in interest charges to borrower loan balances. Navient illegally steered struggling borrowers facing long-term hardship into payment plans that temporarily postponed bills (while interest continued to accrue), the officials alleged, rather than helping them enroll in federal programs that cap payments relative to their earnings and offer the promise of loan forgiveness. Navient has denied the allegations. On Friday, U.S. District Judge Robert D. Mariani in Scranton, Pennsylvania, denied Navient’s motion to dismiss the CFPB lawsuit. Mariani wrote in his ruling that Navient’s argument that its activities complied with the Higher Education Act, Department of Education regulations, and its loan servicing contract with the Education department didn’t relieve the company of its obligation to not commit unfair, deceptive, or abusive acts in violation of the Consumer Financial Protection Act.

As General Motors is scheduled later this year to face yet another bellwether trial over allegations it covered up a deadly ignition switch flaw, it can take some comfort from its generally-successful trial record. But critics of the bellwether system are saying that way of lining up trials does not provide an accurate way of keeping score, the National Law Journal reported today. Last month, the seventh bellwether trial, held before Southern District Judge Jesse Furman, ended in a third jury verdict in GM's favor. Attorneys for Dennis Ward, an Arizona man who says he was injured in a 2014 fender bender caused by a faulty ignition switch in his 2009 Chevrolet HHR that made the vehicle lose power while he was driving in traffic, were unable to convince the jury that the automaker was to blame for the accident. Three other cases settled before they went to trial and two were dismissed by the plaintiffs. Bellwether trials have become an increasingly popular method of dealing with mass torts that are intended to reach jury verdicts that can be used as a basis for the parties to settle other cases. But Alexandra Lahav, a University of Connecticut School of Law professor who is an expert on bellwether trials, says that GM's track record so far in the bellwether cases has not been illustrative of the results of the thousands of cases involving GM's ignition switches, which were linked to 124 deaths and thousands of injuries.

A battle over whether energy-company creditors should help pay for cleaning up thousands of abandoned oil wells in Canada may be heading to the country’s Supreme Court, Bloomberg News reported yesterday. At the center of the dispute is Redwater Energy Corp., a small publicly traded oil producer in Alberta that filed for bankruptcy in late 2015. The receiver that’s liquidating the company argues it should be able to sell its best wells and leave the worst behind for an energy industry-funded group to clean up. The province’s regulator argues that buyers should have to take both good and bad wells, even if it means that the sale proceeds will be lower. A court in Alberta sided with the receiver in May 2016, reducing companies’ concerns about the legal liability of walking away from some of their oil wells. Since then, the number of inactive, abandoned, or otherwise orphaned sites has more than doubled to 3,200, according to the Orphan Well Association, the cleanup group. The provincial government has given the organization an emergency loan to fund the growing costs. Read more.
https://www.bloomberg.com/news/articles/2017-08-01/fight-over-abandoned…

Get a better understanding of what happens when an oil, gas or other natural resources company goes bankrupt. Order your copy of ABI's revised and expanded When Gushers Go Dry: The Essentials of Oil & Gas Bankruptcy, Second Edition.
https://store.abi.org/business/when-gushers-go-dry-the-essentials-of-oi…

A battle over whether energy-company creditors should help pay for cleaning up thousands of abandoned oil wells in Canada may be heading to the country’s Supreme Court, Bloomberg News reported yesterday. At the center of the dispute is Redwater Energy Corp., a small publicly traded oil producer in Alberta that filed for bankruptcy in late 2015. The receiver that’s liquidating the company argues it should be able to sell its best wells and leave the worst behind for an energy industry-funded group to clean up. The province’s regulator argues that buyers should have to take both good and bad wells, even if it means that the sale proceeds will be lower. A court in Alberta sided with the receiver in May 2016, reducing companies’ concerns about the legal liability of walking away from some of their oil wells. Since then, the number of inactive, abandoned, or otherwise orphaned sites has more than doubled to 3,200, according to the Orphan Well Association, the cleanup group. The provincial government has given the organization an emergency loan to fund the growing costs. Read more. 

Get a better understanding of what happens when an oil, gas or other natural resources company goes bankrupt. Order your copy of ABI's revised and expanded When Gushers Go Dry: The Essentials of Oil & Gas Bankruptcy, Second Edition. 

A top financial regulator installed by the Trump administration said yesterday that he wouldn’t seek to delay a new rule on arbitration agreements, skirting a showdown with another agency, the Wall Street Journal reported today. Keith Noreika, acting comptroller of the currency, was previously considering asking the Financial Stability Oversight Council, a board of top regulators, to temporarily halt the rule, citing concerns that the regulation could threaten the stability of the broad financial system. The arbitration rule, unveiled by the Consumer Financial Protection Bureau on July 10, makes it easier for consumers to band together and sue banks, by prohibiting the use of clauses in financial services agreements to force consumers into arbitrations to resolve disputes. Amid strong industry opposition to the rule, Republican lawmakers are seeking to repeal it using a legislative tool called the congressional Review Act. “Given that Congress is considering use of the congressional Review Act to overturn the CFPB’s final rule, I will not petition the FSOC to stay the effective date of the rule,” Noreika said.

Takata Corp.'s bankruptcy filing last month was meant to draw a line under the auto industry's biggest safety recall, but last week's announcement of more air bag inflator recalls suggests automakers could face fresh liabilities in the future, Reuters reported yesterday. In late 2015, U.S. regulators gave Takata until the end of 2019 to prove that its air bag inflators — which now have a drying agent to combat moisture that can degrade the ammonium nitrate compound in its inflators, with potentially lethal results — are also safe. If Takata fails that test — and some industry consultants, explosives experts and former employees question whether the workaround guarantees safety over the long term — it may have to recall all its ammonium nitrate-based inflators. That could include the around 100 million inflators already slated for recall, and 100 million inflators Takata has produced to date with a drying agent. Takata says a third of those desiccated inflators have been used as replacements in the ongoing recall, with the rest going to automakers as part of regular supply contracts. Takata's automaker customers, which have so far borne much of the estimated $10 billion cost of replacing faulty bag inflators, could be on the hook for future liabilities in the event that Takata fails to prove that the desiccant workaround is sufficient.