Takata unit committee, U.S. Trustee object to disclosure statement

By Caroline Salls

Pittsburgh, Dec. 27 – TK Holdings Inc.’s official committee of unsecured creditors and the U.S. Trustee overseeing its Chapter 11 case objected Wednesday to the disclosure statement for the company’s plan of reorganization, according to filings with the U.S. Bankruptcy Court for the District of Delaware.

“It is impossible for a reasonable creditor to be able to make an informed judgment, and thus vote, on the plan, based on the information currently provided in the disclosure statement,” the committee said in its objection.

The committee also said it is “highly unlikely that the plan would be confirmed.”

“Once again, the debtors’ unsecured creditors will be asked to bear all of the associated risk – the cost of a contested confirmation and re-solicitation of votes on the plan (or new solicitation with respect to a different plan) – that could, and likely would, consume the small amount of value currently available for recoveries for unsecured creditors,” the committee said.

In his objection, the acting Region 3 U.S. Trustee, Andrew R. Vara, echoed the committee’s argument that the plan does not contain enough information to allow an informed vote.

“The amended disclosure statement contains incomplete financial disclosures, and many of the financial exhibits were also filed late, providing too little time for parties in interest to review them,” Vara said.

“The disclosure statement does not adequately disclose the allocation of proceeds from the global transaction, nor does it adequately disclose the various waterfalls of distribution described in the plan or disclosure statement.”

In addition, the U.S. Trustee said the disclosure statement fails to adequately disclose proposed “top-up” amounts to be contributed by consenting original equipment manufacturers and does not adequately disclose the sources and amounts of some funds.

Vara also said an exhibit to the disclosure statement includes a heavily redacted indemnity agreement between TK Holdings and the OEMs.

“The presence of heavily redacted materials in the solicitation package conveys precisely the wrong message – that parties receiving the package are not entitled to full information regarding the terms of the plan,” Vara said.

The disclosure statement hearing is scheduled for Jan. 3.

TK Holdings is a subsidiary of Tokyo-based Takata Corp., which manufactures and sells motor vehicle seat belts, airbags, steering wheels, interior trims and child restraint systems. TK Holdings filed bankruptcy on June 25, 2017 under Chapter 11 case number 17-11375.

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