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Takata Files For Bankruptcy Protection Over Air Bag Troubles

DAVID GREENE, HOST:

The Japanese auto part maker responsible for faulty air bags that killed more than a dozen people is declaring bankruptcy in Japan and in the United States. Takata, one of the largest manufacturers of automobile seatbelts and air bags, faces billions of dollars in legal liabilities and also the cost of replacing tens of millions of faulty air bags.

Charles Tatelbaum is a lawyer specializing in bankruptcy at the firm Tripp Scott. He joins us this morning from Old Lyme, Conn. And did this bankruptcy come as a surprise to you?

CHARLES TATELBAUM: No, it was anticipated over the last couple of weeks. They'd been trying to sell the business, and nobody wanted to take the chance of assuming all the responsibilities without bankruptcy.

GREENE: Well, can we talk about how this affects consumers, different groups of consumers? I mean, I wonder if this makes things different now for families of those who were killed and injured in terms of seeking compensation.

TATELBAUM: It does. They're going to have to deal with the bankruptcy court process in the U.S. and maybe in Japan - but probably just in Delaware because now they're going to sell the business. There's going to be a pot of money, maybe about a billion dollars. And it's going to be a feeding frenzy because it's not only the people that were injured but the big manufacturers that need recompense for replacing all the air bags.

GREENE: Oh, so all of that might become sort of a distraction and create a lot of noise that wasn't there before when you have these families who are trying to go through the legal journey of getting money for themselves.

TATELBAUM: Exactly right. I mean, bankruptcy, unfortunately, just becomes a feeding frenzy of everybody trying to get a piece of the pie. Detroit was a perfect example of that.

GREENE: Now, Detroit, you're saying - the city that went into bankruptcy, and we saw...

TATELBAUM: Yes.

GREENE: ...A lot of - that was a very complicated picture. What about if you are a driver and you are still waiting to have your air bag replaced? As I know, there are a lot of drivers out there. I mean, can they still expect to have those replacements come?

TATELBAUM: They will. They probably - may have to sell their car before they do...

GREENE: (Laughter).

TATELBAUM: ...Because somebody has to produce them. The manufacturers have to pay for them. And the estimate is there's still 65 percent of the 46 million recalled air bags have not been replaced.

GREENE: That's a stunning amount of air bags. Well, this, we should say - this company, Takata, was, I mean, by far the biggest producer of air bags for the industry. You say there's going to be this feeding frenzy now. But, I mean, what does this mean for big automakers who use these products?

TATELBAUM: Well, there's a Chinese company that's in Sterling Heights, Mich., called Key Safety Systems that...

GREENE: OK.

TATELBAUM: ...Is going to buy the business and, if the court approves it, take it over and try to take - you know, to run the business and supply the products. But there may be a slowdown there, which will hurt the auto manufacturers themselves for the new cars.

GREENE: Is there a larger lesson we should be taking from this company going to bankruptcy?

TATELBAUM: Well, I think it is when you have a single-source supplier such as the Takata, the manufacturers put all their eggs in that basket.

GREENE: All right, speaking to Charles Tatelbaum, who's a bankruptcy lawyer with the firm Tripp Scott, about the news this morning that the Japanese auto part maker Takata has declared bankruptcy in both Japan and the United States, which could have an enormous impact on people who are looking for compensation for the families who have been killed and injured and also people waiting for their new air bags.

Thanks for joining us this morning. We appreciate it.

TATELBAUM: My pleasure.

(SOUNDBITE OF TEAKWOOD BETZ'S "PERPETUAL GROOVE") Transcript provided by NPR, Copyright NPR.