Takata Airbag Defect. Takata, the maker of the defective airbags at the center of the world’s largest auto safety recall, filed for Chapter 11 bankruptcy in the United States on June 25, 2017.
The defective airbags have been linked to 11 deaths and a number of injuries in the U.S. Takata will sell its surviving operations to a rival auto parts supplier, the New York Times reports.
Takata’s debt, estimated to be more than $9 billion, resulted in bankruptcy filings in the U.S. and Japan, CNNMoney reports. However, it is not expected that the bankruptcy filings will disrupt the massive airbag recall.
The defective-product attorneys at Parker Waichman are available to answer questions about the Takata airbag recalls.
Takata Airbag Recalls Affect 42 Million Vehicles
Takata is a major supplier of airbags to automakers and so the problem with Takata’s airbags has widespread effects. Nineteen different automakers have recalled vehicles to replace front airbags on the driver’s side or passenger’s side or both.
Takata airbags were installed in cars from model years 2002 through 2015. Some of those airbags have deployed unexpectedly, sending shrapnel into the passenger compartment, injuring or even killing occupants.
The defect is with the airbag’s inflator, a metal cartridge loaded with propellant wafers. In some cases, the propellant has ignited with explosive force, rupturing the inflator housing ruptures. Shards can be sprayed throughout the passenger cabin. To date, there have been 11 deaths and approximately 180 injuries in the U.S. linked to the airbag defect.
NHTSA has traced the problem to Takata’s use of an ammonium nitrate-based propellant without a chemical drying agent. In hot, humid climates, and with older airbags, the airbags might not inflate properly or they might explode, propelling sharp metal and plastic fragments around the passenger compartment.
The early recalls, for Honda models, included vehicles in states with high heat and humidity. But eventually regulators and automakers realized the problem could occur anywhere and the recalls expanded nationwide and to many automakers.
Consumer Reports says the recall is expected to involve 42 million vehicles in the U.S., and between 64 and 69 million airbags. Vehicle owners can visit www.safercar.gov to see if their vehicles are included.
The National Highway Traffic Safety Administration (NHTSA) described this as “the largest and most complex safety recall in U.S. history.” The massive scope of the recall has left automakers struggling to find sufficient supplies of replacement airbags. Automakers also face difficulty contacting owners, especially of older cars.
Older vehicles are often transferred to new owners in private sales or as part of an estate and the new owner may not be registered with the automaker. A recall notification may not reach the current owner.
Takata Settlement
Earlier this year, Takata agreed to pay $1 billion to settle multidistrict litigation in the U.S. over the defective airbags.
The $1 billion included a $125 million fund to compensate victims and their families. In addition, NHTSA levied a $200 million fine on Takata. Takata admitted that it failed to inform the agency about the defect despite the fact that it was aware and withheld important information.
Key Safety Systems, a Chinese-owned company based in Michigan, is reportedly paying $1.6 billion for nearly all of Takata’s operations. Key Safety Systems has sought to wall itself off from Takata’s legal problems by buying Takata’s assets, but not the company itself, the New York Times reports.
Automakers including Honda, Toyota, and GM, who used Takata airbags in their cars, could also face major expenses following the Takata bankruptcy because they are likely to have to cover most of the estimated $5 billion needed to pay for replacing tens of millions of Takata airbag inflators still in vehicles.
CNN reports that only 35 percent of vehicles with Takata airbags have had the inflators replaced. It could take until 2020 or beyond to complete all the airbag replacements. But the Times explains that automakers—anticipating a Takata bankruptcy—have set aside cash reserves to absorb the recall costs.
Chapter 11 bankruptcy provides for the reorganization of a company, allowing the company to keep going and pay off debts over time. But the Times reports that Takata’s prospects are uncertain. The airbag inflator replacements are only partially completed, so no one yet knows how much the recall will ultimately cost or how much victims might be awarded in lawsuits. Some analysts believe the recalls alone will cost $10 billion or more, according to the Times.
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