A recent American Lawyer story by Brian Baxter, “Takata Parent’s Bankruptcy Reveals Big Monthly Litigation Fees,” reports that Japanese auto parts giant Takata Corp., which followed its U.S. unit into a Delaware bankruptcy court, revealed in court documents that it is paying nearly $1 million per month to an Am Law 100 firm advising it in product liability litigation over faulty air bags.
A court filing in Takata’s Chapter 15 case by Covington & Burling partner Shankar Duraiswamy in Washington, D.C., revealed that between January and June of this year, Takata has paid roughly $877,000 each month in legal fees and costs to his firm for work in air bag-related litigation. That would put the amount that Covington has earned this year from Takata’s Japanese parent at nearly $4.4 million.
In a separate court filing by Covington on July 7 in the Chapter 11 case of TK Holdings Inc.—Takata’s North American subsidiary—Covington stated that it had received nearly $6.6 million from the debtor in the 90 days prior to its bankruptcy filing on June 25 in Wilmington. That document, filed by Covington product liability litigation partner Keith Teel in Washington, D.C., disclosed that the firm was also holding a $1.9 million retainer for its services to TK Holdings.
A Covington spokesman declined to discuss the firm’s work on behalf of Takata or clarify whether the filings in the two separate bankruptcy cases tallied up different sets of fees. In 2015, Takata tapped the firm to serve as co-lead counsel with Dechert in the growing air bag litigation. In January, Takata reached a $1 billion criminal plea deal in Detroit with the U.S. Department of Justice related to its sale of defective air bags. Court filings show that Dechert worked with Covington on that matter for Takata.
The July filing by Covington seeking to advise TK Holdings in its Chapter 11 case states that in the spring of 2016 the firm took over from Dechert as “lead counsel in all litigation matters arising from the air bag litigation.” An attached declaration by Teel states that Covington partners, of counsel, senior counsel and special counsel are billing TK Holdings between $725 and $1,575 per hour for their services, associates between $455 and $700 an hour and staff attorneys at hourly rates ranging from $215 to $365.
Covington’s Teel has taken the lead for the company in multidistrict civil litigation that it faces in Miami—and is now trying to stay with its dual bankruptcy filings. The Chapter 15 filing Tuesday by Tokyo-based Takata and its affiliates Takata Kyushu Corp. and Takata Service Corp. lists Delaware’s Young Conaway Stargatt & Taylor and leading Japanese firm Nagashima Ohno & Tsunematsu as outside legal advisers. Neither firm has yet filed billing statements with the bankruptcy court in Wilmington.
Weil, Gotshal & Manges, Delaware’s Richards, Layton & Finger and Nagashima Ohno have taken the lead for Auburn Hills, Michigan-based TK Holdings in its bankruptcy case, according to our previous reports, which noted that Weil had received payments totaling $19.1 million from Takata since August 2015. Other firms that have since filed papers seeking to advise the debtor include Delaware’s Ashby & Geddes and Washington, D.C.’s Frankel & Wyron. Dechert has not filed an appearance in the Chapter 11 case of TK Holdings or Takata’s Chapter 15 case.
Milbank, Tweed, Hadley & McCloy, national bankruptcy boutique Pachulski Stang Ziehl & Jones, Delaware’s Whiteford, Taylor & Preston, insurance law firm Gilbert and the Sakura Kyodo Law Offices in Tokyo are representing an official committee of unsecured creditors in the Chapter 11 case of TK Holdings.