Weighted down by airbag recalls and personal injury lawsuits, the Japanese airbag maker Takata Corporation filed for bankruptcy protection on June 26 in both the US and Tokyo. The airbag manufacturer stated that is was the only option it had for continuing to produce replacements for defective airbag inflators that caused the deaths of at least 16 people, as well as many airbag lawsuits and legal settlements.
The bankruptcy filing by Takata Corp. will pave the way for a takeover of $1.6 billion by rival Key Safety Systems. This accounts for most of the assets of Takata. Key Safety Systems is based in Michigan but is owned by a Chinese corporation.
The defective Takata airbag inflators can explode upon impact with too much force when the airbag inflates. This can cause shrapnel to spew throughout the cabin. Not only have the airbag inflators led to 16 deaths; there also have been at least 180 injuries around the globe.
As of June 2017, 100 million airbag inflators have been recalled around the world. This is the largest automotive part recall in US history. The recalls have included 69 million airbags in the US and 42 million vehicles.
The president of Takata, Shigehisa Takada, told the press in Tokyo last week that the company was losing value quickly, and filing for bankruptcy was the only way that the company could continue to produce replacement parts for the defective inflators.
Takada told media that the company is in a very difficult circumstance, and it had to find a way to continue to supply products to companies that need to replace some of their airbag inflators. He emphasized that there was no other way that the company could afford to continue operations without declaring bankruptcy.
Takada also stated that he plans to leave the management of the company once it has been fully handed over to Key Safety Systems and the transition is handled in a smooth fashion. Takada added that he would not want to be involved in the management of Takata airbags with the new owner.
Takata Delisted from Tokyo Stock Exchange
The Takata bankruptcy filing, which was first established in 1933 as a maker of textiles, led the Tokyo Stock Exchange to announce this week that it would delist the corporation.
Under the Key agreement, small parts of the Takata company will continue to produce inflators that will be used as replacements for the recalls. The airbag recalls currently affect 19 auto manufacturers.
Takata intends to use part of the proceeds from the sale to reimburse auto manufacturers. However, industry experts state that the auto companies are still being forced to pay for a large portion of the recalls out of their own coffers.
The entire airbag recall process could take years longer. One of the lawyers for Takata – Nobuaki Kobayashi – stated that it is too soon to provide an accurate estimate of the auto airbag recalls. He also would not confirm that the total cost will exceed $9 billion.
According to Kelley Blue Book and Autotrader, it is likely that all auto companies involved in the recall will need to pay into the recall cost; the value of all of Takata’s assets are not enough to cover the billions in costs.
Takata’s bankruptcy is a result of familiar failings https://t.co/iDiMU8hA2t #business #globalbiz
— #Globalbiz (@GLBiznet) June 29, 2017
Japan’s Ministry of Economy, Trade and Industry stated last week that it is setting up assistance programs it calls ‘advice windows’ to help small and medium sized suppliers that are facing trouble due to the Takata recall.
Approximately 70% of the airbags that were recalled in Japan have been replaced, as well as 36% in the US. Still, there are millions of vehicles around the world that are carrying airbags that could improperly inflate in an accident, leading to serious injuries or even death.
Takata and some automakers were slow to deal with the airbag problem, even though there were reports of injuries and deaths. Eventually it was necessary to recall tens of millions of cars, trucks and SUVs. The enormous scope of the recalls means that many car owners have faced long waits for replacement airbags. They were still therefore driving cars with airbags that could hurt them in a wreck.
Ammonium Nitrate-Charged Canisters Led to Problem
The problem with the airbags is related to the use of the chemical ammonium nitrate in the airbag inflators. The inflators are used to deploy the airbags in an accident. The chemical is a volatile explosive that can break down when it is exposed over time to hot and humid air, which can occur in many cars that are left outside in the summer and other hot periods. This can cause the chemical too fast when deployed, leading to the cannister exploding.
Approximately $1 billion from the Key sale will be used to satisfy the criminal charges settlement against Takata in the US; those charges stemmed from the company concealing the serious problems with its airbag inflators. Of that $1 billion, approximately $850 million will go to auto manufacturers to assist them in covering costs from the recalls. Takata to this point has paid $125 million into a victims fund, and a $25 million fine to the Department of Justice.
Personal injury attorneys who represent the injured are concerned that $125 million will not be sufficient to provide compensation for airbag defect victims. Many of those hurt in accidents suffered serious facial injuries from shrapnel. One of the victims, who is 26 years old, will never be able to smile again due to serious facial nerve damage.
The leading personal injury attorney suing various automakers stated that he does not affect that the bankruptcy announcement will affect the various pending claims against the auto corporations. Settlement agreements have been approved already involving Toyota, BMW and Mazda.
The airbag defect settlement will increase the speed of the faulty inflators from more than 15 million vehicles, and will compensate consumers for their economic losses. Claims are continuing to be made against Ford, Honda, Nissan and Takata.
Key is a manufacturer of airbag inflators, seat belts and crash sensors for many auto manufacturers, and is owned by Ningbo Joyson Electronics Corporation. The global headquarters for that Chinese company are in Sterling Heights, Michigan.
Key has stated that it does not plan to eliminate any Takata jobs or close Takata facilities at this time. However, the corporate name Takata will likely not continue after the bankruptcy is completed. Takata currently states on its website that it apologizes for the problems that have been caused by the inflators, and it also hopes that the name Takata will someday be associated again with safety.
When to Hire a Personal Injury Attorney for Airbag Injuries
If you or a loved one has been hurt by an exploding and defective Takata airbag, you will want to hire an experienced airbag personal injury attorney as soon as you can. You should not hesitate to contact a personal injury attorney to help you to recover medically and financially from any airbag injuries suffered.
Please contact us about your airbag injury case today.