Long crippled by lawsuits and recall costs over its faulty air bags, Takata, the Japanese auto parts maker, filed for bankruptcy protection in Japan and the U.S. on Sunday.
Takata is on the hook for billions of dollars to banks and automakers, which have been covering the replacement costs of tens of millions of the recalled air bag inflators.
The company plans to sell what’s rest of its operations to the rival U.S. auto parts supplier, Key Safety Systems, for $1.588 billion.
Automakers will be able to recover some costs from Takata’s remaining assets, but “experts say the companies still must fund a significant portion of the recalls themselves,” reports The Associated Press.
It’s the largest safety recall in automotive history. Worldwide, 100 million inflators have been recalled, 69 million of them in the U.S., affecting 42 million vehicles by 19 different automakers, according to the wire service.
Takata’s air bag inflators are blamed for rupturing and spewing dangerous debris into a vehicle’s cabin, as NPR’s Sonari Glinton reported.
In January, the auto parts maker pleaded guilty to concealing the defect in millions of its air bags as the Two-Way reported earlier this year.
In that settlement, as NPR’s Bill Chappell noted,
“Takata agreed to pay $1 billion over air bag fraud; three of the company’s executives were also criminally charged. That total included $125 million that’s earmarked as restitution to people who are physically injured by defective air bag systems.”
At the time, the defective air bags were linked to at least 16 deaths, including 11 in the U.S.
And U.S. lawmakers have criticized Takata’s slow pace of addressing the recalls. As Bill reported last month, “As of late April, they say, all of the auto makers in today’s settlement had completed less than a third of their air-bag related recalls.”
“There are not very many airbag makers,” Autotrader analyst Michelle Krebs tells NPR. “So a lot of these recalled vehicles have not been fixed, the airbags don’t exist for them to be fixed yet.”