Takata, brought down by airbag crisis, files for bankruptcy

Xavier Trudeau
Juin 26, 2017

Honda Motor Co. and Mitsubishi Motors Corp. each said the company's filing for bankruptcy protection in the US and Japan will complicate collection. Japanese air bag maker Takata, overwhelmed by lawsuits, recall costs, filed for bankruptcy protection on Monday. The defect, which triggered the largest recall in USA history, been linked to at least 16 deaths and more than 180 injuries. So far 100 million inflators have been recalled worldwide including 69 million in the USA, affecting 42 million vehicles.

As part of its bankruptcy filing the company agrees to sell most of its assets to Sterling Heights-based Key Safety Systems for $1.6 billion.

Kevin Dean, a lawyer in SC who has dozens of cases pending against Takata, told ABC News the company's bankruptcy filing was "a cowardly act by a cowardly company and their lawyers to avoid liability". "One gentleman cannot smile anymore. It damaged one of his facial nerves to the point where he cannot speak anymore". At the end of April, only 22 percent of the 69 million recalled inflators in the USA had been replaced, leaving nearly 54 million on the roads, according to the National Highway Traffic Safety Administration website.

The money from the sale of the business to Key Safety Systems will be used to cover those and other costs resulting from the airbag recall.

"It's likely every automaker involved in this recall will have to subsidize the process because the value of Takata's assets isn't enough to cover the costs of this recall", said Karl Brauer, executive publisher of Kelley Blue Book and Autotrader.

Trading in Takata shares was suspended at the opening of the stock market Monday after a week of wild volatility and the Tokyo exchange said it would delist the firm on July 27. It is owned by China's Ningbo Joyson Electronic Corp. That makes it unclear whether anyone injured by inflators in the future would have any legal recourse against either company. "We hope the day will come when the word "Takata" becomes synonymous with 'safety, '" the website says.

Honda, a big Takata shareholder and formerly its biggest customer, is also unsure how Takata's bankruptcy filing will affect its 1.2 percent holding in the supplier.

The company added that the bankruptcy proceedings should have no effect on the recall.

June 2009: Honda recalls more than half a million air bags to fix the defect.

The ultimate cause of the malfunctions has not yet been identified but three factors are suspected: a chemical component, ammonium nitrate, that responds poorly to humidity; extreme climatic conditions, such as heat and high humidity; and faulty design. Yet only about 15.5 million of the 69 million inflators had been replaced as of the end of April. Some Takata replacement inflators will have to be replaced again because don't have the drying agent.

Honda uses Autolive and Daicel in most of its replacements for recalled Takata inflators too.

Some automakers are offering loaner cars until replacement parts are available. Without parts, dealers can't perform the recalls and it is illegal for service centers to disable airbags. Many automakers have switched to competing airbag manufacturers to supply them with replacement airbags.

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