What Are The Takata Bankruptcy Lawsuits?
The Takata Corporation is a Japanese producer and distributor of auto parts. You’ve probably heard of them in reference to the air bags they produce, which created a huge
scandal, starting in 2013. This when people started dying and suffering devastating injuries from the defective air bags that the company created. Their slogan, ‘Quality First,’ certainly did not seem to apply to this particular part. At least 16 people were killed by the air bags that were supposed to save them in an accident. Over 42 million cars were recalled because of the defective part, making it the largest vehicle recall in the history of the US.
What Was the Problem with the Defective Air Bags of the Takata Corporation?
The Takata Corporation started producing air bags in 1988 and quickly held 20% of the air bag market. The recalls didn’t start until 2013, but there are reports that problems existed as far back as 2003. The issue with the air bags was with the inflator units. This is the part of the air bag that causes it to inflate when the vehicle impacts another vehicle or another object. Moisture and humidity were reported as a causal factor, causing the volatile propellant inside the inflator unit to destabilize. This then caused the air bags to explode and shrapnel to injure, maim, and kill the vehicle occupants.
The Takata Corporation Filed for Bankruptcy in June 2017
Because they were facing more than $1 billion in penalties and other costs that were associated with the defective air bags, Takata ended up filing for Chapter 11 bankruptcy in the United States and bankruptcy protection in Japan on June 25, 2017. The basic reason is that they owe more in compensation than they can possibly pay while still staying in business. They are selling their assets to their largest competitor, Key Safety Systems in China and Michigan in the US. They should get close to $1.6 billion from the sale of their assets, potentially allowing them to pay their expenses.
Will the Takata Corporation Bankruptcy Filing Affect Compensation for Victims in the United States?
Fortunately for those who are seeking compensation for injuries and deaths that were caused by the defective air bags produced by the Takata Corporation, this should not affect their compensation. Criminal action was taken against the company by the United States Justice Department, and they were ordered to put $125 million into a victim compensation fund. The program to ensure that victims and their families are able to receive this compensation is operated by Kenneth Feinberg, the same man who managed the victim compensation fund for 9/11 victims and victims of the malfunctioning ignition switches from a General Motors case. The Takata Corporation plead guilty in a United States court for mishandling the defective air bag cases, and also agreed to pay $1 billion in penalties, which included the fund for victims of their defective air bags.
What Will the Bankruptcy Proceedings and Protections Accomplish for Takata and Victims?
According to the Takata Corporation, by filing for bankruptcy and bankruptcy protection, they will be financially able to continue supplying replacements for the defective inflator units of their air bags. The sale of their assets to Key Safety Systems, once authorized by a federal bankruptcy judge, should allow them to raise enough funds to cover the recall costs and the legal and compensation expenses. It will also allow for employees of the Takata Corporation to remain employed, as Key Safety Systems will absorb the 60,000 employees of the Takata Corporation in more than 20 different countries.
What Does the CEO of the Takata Corporation Have to Say About All of This?
The chief executive officer of the Takata Corporation, Shigehisa Takada, has expressed that the top priorities of himself and the company as a whole include the necessity of providing a steady supply of products to those vehicles that have been affected and need to have parts replaced while also ensuring that care is given to employees. The aim of their proposed agreement is to achieve these goals. They hope to further accomplish these goals through a debt-restructuring process in Japan.
They have also admitted that their employees were aware of the issues with the inflator units of the defective air bags as early as 2000 and that testing data was manipulated to convince auto makers to continue purchasing their airbags instead of buying from their competitors. This is a huge change for the company’s reputation since they’ve been one of the largest suppliers of critical vehicle safety equipment, including air bags and seat belts, in the whole world. They have also created lifelines for parachutes and other uses with their special weaving technology. This means that millions of people have put their safety in the hands of this company over the decades and can no longer trust them.
The Chief Financial Officer of the Takata Corporation, Yoichiro Nomura, apologized on behalf of the whole company in federal court in February 2017 in Detroit. He expressed deep regret for the fraudulent behavior of the company and the testing data, stating that their actions were inappropriate.
Because of these actions, the United States Justice Department also pressed criminal charges against certain executives of the Takata Corporation, including Shinichi Tanaka, Hideo Nakajima, and Tsuneo Chikaraishi. They were charged with conspiracy to commit fraud and five counts of wire fraud. Yet, these individuals live in Japan and have not come to the United States to appear in court.
Who is Affected by the Takata Corporation Defective Air Bag Scandal?
There have been more than 30 brands of automobiles affected by the defective air bag scandal of the Takata Corporation. Among these are vehicles from 2001 to 2011, produced by brands like Acura, Honda, and Volkswagen, among dozens of others. Some of the first recalls were in 2008 from Honda, who recalled 4,000 Civics and Accords.
If you have been affected by defective Takata air bags, call Farah & Farah to learn more.