How Takata Filing Bankruptcy Could Impact You
After a massive airbag recall, Takata has been forced to file bankruptcy in both the U.S. and Japan in order to pay their looming court fees and recall costs. At least 16 people have died and 180 have been injured as a result of the airbags deploying too quickly and spraying shrapnel. The faulty design is due to the use of ammonium nitrate which forcefully explodes when exposed to heat. This has led to the largest vehicle recall in history with up to 100 million inflators expected to be retracted.
Takata has been found to have fraudulently kept the danger from the public in an effort to protect themselves from the devastating costs of repairing the error. According to USA TODAY, they have agreed to a $1 billion settlement. The money will be paid in various accounts with $850 million going to auto manufacturers to fix the dangerous airbags, $125 million to the victims, and $25 million to the government.
The staggering amount of the settlement has forced the company to sell, and it will be acquired by Key Safety Systems (KSS) for $1.6 billion. The U.S.-based company is owned by Ningbo Joyson Electronic Corp. of China. They intend to maintain Takata’s current workforce and their safety operation.
It is expected that the sale will allow KSS to take over the faltering company without taking on their debts and liabilities, both past and future. This raises concern for the victims of the dangerous airbags. With only 22 percent of the unsafe airbags repaired, it leaves roughly 54 million still on the road in the U.S. It is anticipated that more people will be injured by these malfunctioning airbags.
The company originally began in 1933 as a textiles manufacturer. They began producing airbags in 1987, managing to become the 2nd leading contributor to the safety devices. With the rising costs of the deadly airbags, Takata has been in the red for the last three years. This has forced them to sell subsidiaries to cover their overwhelming fees.
There is a great deal of speculation as the bankruptcy and purchase move forward. Honda has not yet reached a settlement with Takata and lawyers of the many victims are doubtful the sale will cover the growing costs associated with the safety issues. Despite the concern, it is expected that the bankruptcy will be settled in early 2018.
KSS plans to maintain the strong workforce and manufacturing of Takata’s protective restraints. They intend to utilize the already competent production system, warehouses, and quality workforce. This will hopefully allow the 60,000 people who already work for the company to keep their jobs.
As the public continues to observe the bankruptcy proceedings, be sure to check if your vehicle could be part of the recall.
[Featured Image by Paul Sancya/AP Images]
