Japanese-based company Takata and it’s United States counterpart TK Holdings Inc. both filed for Chapter 11 bankruptcy in their respective countries last year. Following what some might call the largest automotive recall in history, the company just couldn’t keep up with the financial and public relation demands, which consisted of multiple lawsuits, multi-million dollar fines, and extreme recall costs.
Takata’s airbags are prone to inflate with too much force, spraying neutral fragments through the vehicle. The airbag inflation issue has been linked to hundreds of injuries and at least 22 deaths. USA Today reports that at least 42 million vehicles and as many as 69 million inflators have been recalled in the United States, and 100 million inflators have been recalled worldwide.
Vehicle owners whose vehicles are on the Takata recall list contact their local dealership to schedule their free repair. Owners can check for recalls by looking up their Vehicle Identification Number (VIN) on the National Highway Traffic Safety Administration’s (NHTSA) online database. The NHTSA urges vehicle owners to sign up for automatic notifications, as recalls are expected to continue into December of 2019.
The Chapter 11 bankruptcy had some opposition with committees for injured drivers and a committee of unsecured creditors. In February, Takata was able to reach a deal with these committees, along with the help of automakers and Key Safety Systems. (Key Safety Systems plans to purchase the viable business lines of Takata).
As reported by Reuters, “According to the agreement, a trust will be established to pay for compensation for those injured or killed by the airbags, which will be funded in part by automakers surrendering some of their claims against Takata.” The thirteen automakers who were part of this agreement include: General Motors Co, Ford Motor Co, Toyota Motor Corp, and the United States Affiliates of Honda Motor Co Ltd and Volkswagen AG, the United States Affiliates of Honda Motor Co Ltd, and Volkswagen AG.
The established trust is to pay compensation based on the injury acquired, ranging from $10,000 from bruising to $5 million for death or loss of eyesight. In addition, the agreement will prevent injured drivers from suing Honda. In return, Honda agreed to pay in full claims by owners of its vehicles.
Key Safety Systems, a unit of China’s Ningo Joyson Electric Corp., completed it’s purchase Takata’s viable operations for $1.6 billion in April of 2018. The combined companies will be named Joyson Safety Systems, and will be based in Michigan. They will continue manufacturing auto safety products, and the new acquisition will allow them to compete with industry leaders, such as Autoliv Inc and SF TRW.
The proceeds of Takata’s sale are set to fund restitution claims for automakers and to help pay injury claims as part of a plea deal with the United States Department of Justice. Part of the agreement in the sale was to ensure that replacement inflators will continue to be produced as that part of the company winds down, which some say could take years.