Takata Agrees to Settle Investigation by 44 State Attorneys General Over Deadly Air Bags

February 22, 2018 – Takata’s U.S. unit agreed Thursday to settle a probe by 44 state attorneys general into claims it concealed a deadly safety defect with air bag inflators.

TK Holdings, which is in bankruptcy reorganization proceedings, agreed in the settlement to a $650 million civil penalty over the defect linked to at least 22 deaths. South Carolina Attorney General Alan Wilson said in a statement that because Takata does not have the money, the states “agreed not to collect this civil penalty in order to maximize the recovery available to consumers who were the victims.”

In February 2017, Takata pleaded in a U.S. federal court to a felony charge as part of a $1 billion settlement that included compensation funds for automakers and victims of its faulty air bag inflators in connection with the largest automotive recall in history.

The company’s air bag inflators can inflate with too much force and spray metal fragments. Three former senior Takata executives were charged in January 2017 with falsifying test results but none have appeared in a U.S. court.

The company agreed in the settlement to “not represent that its airbags are safe unless supported by competent and reliable scientific or engineering evidence” and “not falsify or manipulate testing data, or provide any testing data that the companies know is inaccurate.”

On Friday, a lawyer for TK Holdings said the company is on the verge of receiving court approval for its reorganization and $1.6 billion sale of its non-air bag businesses.

At the start of a hearing in U.S. Bankruptcy Court in Wilmington, Delaware, lawyer Marcia Goldstein told the court that Takata’s U.S. unit had resolved nearly all objections to the reorganization.

The judge will hear from some objectors before reaching any decision.

Takata and TK Holdings Inc filed for bankruptcy last year in the wake of the recall. The company has said it has recalled, or plans to recall, about 125 million inflators worldwide by 2019, including more than 60 million in the United States.

As part of the company’s bankruptcy plan, automakers are contributing between $80 million and $130 million to help compensate those injured.

That agreement removed a major obstacle to the plan of reorganization by Takata’s U.S. unit and helps ensure the sale of Takata’s non-air bag inflator businesses to Key Safety Systems, a unit of Chinas Ningo Joyson Electric.

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