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Friday , 15 December 2017
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Takata’s bankruptcy may affect auto industry’s biggest recall

Automotive airbag manufacturer Takata Corporation’s expected bankruptcy is likely to impact one of the biggest and most complicated recalls in the history of automotive industry. The company is expected to file for bankruptcy in the next few days, and it can come as soon as on Monday. While employees of Takata Corporation are among the most worried, the trouble may also be brewing for millions of car owners with defective air bags. It may be recalled that Takata supplies air bags to several of the leading car manufacturers including Tesla and Toyota Motor Corp. After defects were noticed in its air bags, Takata had pledged to recall and replace tens of millions of defective air-bag inflators.

However, with its impending bankruptcy proceedings, experts said that it may no longer have the funds to carry out the recall. A filing in US bankruptcy court does not necessarily free a company from all its liabilities such as product recall, but in case it does not have funds, then carmakers will have to bear the cost. Also, as per US bankruptcy laws, an acquiring company cannot be forced into taking over unwanted liabilities such as product recall responsibilities.

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