Air bag maker Takata bankruptcy expected Monday in Japan, US

Marco Green
June 27, 2017

The move clears the way for Takata to get out from under its mounting liabilities and restructure, but could leave carmakers holding the bag.

Global transport authorities have ordered about 100 million inflators to be recalled.

Key Safety, based in Sterling Heights, Mich, said the remaining recalls would be run by a reorganized Takata and will eventually be completed, although it did not specify a timetable. "We anticipated difficulty in claiming compensation", Kachi said. The recalls, which are being handled by 19 affected automakers, will continue.

Toyota said its claims against Takata "are at the risk of becoming uncollectable or being delayed".

Takata faces billions in lawsuits and recall-related costs to its clients, including Honda, BMW (BMWG.DE), Toyota Motor Corp (7203.T) and others which have been paying recall costs to date. That amount could increase if further recalls are necessary, it warned.

It also faces potential liabilities stemming from class action lawsuits in the United States, Canada and other countries. Yet only about 15.5 million of the 69 million inflators had been replaced as of the end of April. It has earmarked another 41.5 billion yen ($373.0 million) in the current fiscal year ending March 31, 2018, and the fiscal year after that. Takata's assets bring with them a deep customer base. The automaker later became its biggest customer, a relationship that came back to bite Honda when Takata became embroiled in its defective inflator scandal.

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. The deaths and injuries were the results of the inflators deploying with too much force, shattering their housings with the shards scything through the passenger compartment.

The company's defective airbag inflators, which can explode and send shrapnel into drivers and passengers, have been blamed for 11 deaths in the USA and several others elsewhere. Some Takata replacement inflators will have to be replaced again because don't have the drying agent.

The Japanese firm is now supplying only 25% of the replacement inflators, according to Upham, with rival companies providing the rest. More recalls are coming as more parts are made.

But in certain limited cases, Honda still uses ammonium nitrate inflators from Takata as replacements for those recalled, Kachi said. Apart from the fatalities, they're also responsible for at least 180 injuries, and touched off the largest automotive recall in US history.

Eleven deaths have been attributed to the faulty inflators in the USA and the death toll is likely to continue rising, as many millions of the defective inflators have remained in service, while Takata has struggled to manufacture enough replacement parts.

Other reports by Click Lancashire

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