Airbag manufacturer Takata cleared several legal hurdles in the past week as it winds down operations and digs out of other legal troubles.

A U.S. bankruptcy judge in Delaware approved a plan negotiated by Takata and its creditors to create a trust fund to compensate the victims of exploding airbag inflators.

Automakers are giving up some monetary claims against Takata and agreeing to contribute $90 million to $137 million to the trust fund.

Separately, a group of 44 state attorneys general settled charges that Takata concealed safety issues. The states alleged that Takata engaged in unfair and deceptive practices and that the automaker’s actions violated state consumer protection laws, according to Michigan Attorney General Bill Schuette

Takata’s Bankruptcy Agreement

The bankruptcy deal has the most implications for consumers.

Motley Rice, a wrongful-death and personal-injury law firm based in Mount Pleasant, S.C., helped negotiate the deal to create the trust fund. The firm said in a statement that the trust fund would provide fair options for people hurt in Takata crashes and “provide swift resolution and allow victims to try to move on with their lives.”

“Like dynamite in your car, these airbags should have never been installed in millions of vehicles,” Motley Rice attorney Joe Rice said in a statement.  

The Takata Airbag Individual Restitution Fund will be run by a special master, Harvard University professor Eric Green.

The Takata airbag recall is one of the biggest and most complex in U.S. history, involving 37 million vehicles across multiple car brands, models, and years. According to the National Highway Traffic Safety Administration, 15 deaths associated with Takata airbag inflators have been reported so far in the U.S. At least 240 people have been injured, NHTSA says.

MORE ON THE TAKATA AIRBAG RECALL

Manufacturers paying into the trust fund include: BMW, Daimler Trucks, Fiat Chrysler Automobiles, Ford, General Motors, Honda, Mazda, Mitsubishi, Nissan, Subaru, Toyota, Volkswagen, and Volvo.

If consumers aren’t satisfied with their settlement offers, they can still go to court, according to the plan filed in the bankruptcy proceeding.

The trust fund will evaluate claims on a spectrum of injuries, according to court documents. They list potential payouts, ranging from $2 million to $5 million for a fatality; $3 million to $5 million for loss of vision; $1 million to $3 million for severe brain trauma; and up to $2.5 million for paralysis. Actual cash payments will be calculated according to a complicated points system that accounts for age, income, dependents, and suffering.

These types of personal injury claims are separate from other types of economic loss, such as diminished value of the vehicle or compensation for rentals while waiting for airbags to become available. There are several class-action lawsuits still pending, and those won’t be affected by the creation of the trust fund.


The Special Master

The trust fund has a website with basic information about what’s coming, but it’s not ready to take claims yet.

Green, the special master, will have access to several sources to pay settlements, including $125 million set aside by Takata as part of its criminal guilty plea in the Department of Justice’s fraud case last year, and the $90 million to $137 million set aside for injury claims in the Takata bankruptcy.

The fund is designed to compensate for injury-related costs only. Economic damage claims must go through the bankruptcy court, along with all of Takata’s other remaining creditors. Examples of economic damage would include inability to use your car, diminished sales value, the cost required to fix your car or unpaid time off work to get the recall repairs completed.

Green didn’t respond to a request from Consumer Reports to answer questions about the trust fund.

Honda, which has by far the highest number of vehicles covered by the airbag recalls, has created its own approach to compensate Takata victims. Thirteen of the 15 deaths happened in Honda or Acura vehicles. According to a spokesman, the automaker will build a program, called a “channeling process,” to expedite payments to these victims. In this process, common to bankruptcy cases, customers who were injured or the families of customers killed by defective Takata airbag inflators can submit claims to a special bankruptcy trust designed to compensate them for their injuries or loss of a loved one, the spokesman said in an email.

Honda has agreed to let Green evaluate each of its claim and determine the compensation. The fund will pay claims from Honda and Acura customers partially from the trust fund and partially with money from Honda.

Honda says it hasn’t set aside a specific amount of money to cover claims. Rather, it will pay its portion as each claim is approved by the special master.  



Settlement With the States

In the other legal agreement, negotiated to resolve the state allegations of deceptive business practices, Takata agreed to comply with all state and federal laws. It will continue to cooperate with auto manufacturers to produce and replace airbag inflators as quickly as possible.

Takata agreed that it wouldn’t:

  • Advertise the safety of its airbag systems or phase-stabilized ammonium nitrate in any way that is false, deceptive, or misleading.
  • Represent that its airbags are safe unless supported by competent and reliable scientific or engineering evidence.
  • Falsify or manipulate testing data or provide any testing data that the company knows is inaccurate.
  • Except as needed to fulfill its obligations under the various recalls, sell any airbag systems using the same phase-stabilized ammonium nitrate as a propellant.

Takata sold most of its U.S. airbag business last year to Michigan-based Key Safety Systems. But the deal didn’t include the repairs being done as part of the massive, government-managed exploding airbag recall. And it didn’t include the liability for any injuries caused by defective airbags.

What’s left of Takata is producing replacement airbags until all the recalls are complete. That process probably has several years to go. The company says that production is proceeding and that there are plenty of airbags available as repairs are staged according to the schedule set by NHTSA.  


Automaker Airbag Statuses

CR asked all the automakers involved in the Takata recall whether they are getting enough replacement inflators and how long consumers should expect to wait before the repair work can be done on their vehicle (assuming that the automaker has told them the repair parts are available).

Here’s what they said.

Automaker (Brands)

Is the Car Company Getting Enough Replacement Inflators?

How Long Should Consumers Expect to Wait Before Getting Repair Parts Installed?

BMWDid not address.If replacement parts are not available, BMW has authorized its centers to provide or assist customers with alternate transportation, subject to availability.
Daimler Trucks/VansDid not respond.
Fiat Chrysler Automobiles (Chrysler, Dodge, Jeep, Ram)YesRepairs should be able to be completed immediately.
FerrariDid not respond.
Ford (Ford, Mercury, Lincoln)

Ford says it has parts available for some vehicles now, depending on the recall and priority group as directed by NHTSA. Ford has permanent repairs available for all driver's-side inflators that have been recalled (2005-2014 Ford Mustang, 2005-2006 Ford GT, and 2004-2006 Ford Ranger built in North America). Ford has permanent passenger inflator replacement parts available for 2004-2006 Ranger vehicles, and owners are being notified.

Once a customer is notified that parts are available to complete their recall, they should contact their dealer to schedule an appointment. The recall repair procedure can begin very quickly.

General Motors (Cadillac, Chevrolet, GMC, Pontiac, Saab, Saturn)

GM says it has not experienced any significant delays in getting replacement inflators to meet NHTSA’s replacement schedule.Customers should have their vehicles repaired as soon as they are notified that parts are available.
Honda (Acura, Honda)Honda says it has sufficient replacement inflators to repair all affected Acura and Honda models.There should be no significant parts-related delay for any U.S. customer. Owners of affected vehicles should seek repairs immediately.
Jaguar Land RoverYes

Repairs should be immediately scheduled and performed by an authorized Jaguar Land Rover retailer. If repair parts are not already in inventory, they generally arrive in a matter of days. The repair work is expected to take about 2 hours to complete, depending on dealer schedules.

MazdaYes

While repair times can vary from 1 to 2 hours, wait times might be longer depending on dealer schedules. Mazda has authorized dealers to provide free loaner vehicles upon request.

McLarenDid not respond.
Mercedes-Benz

Dealers have an adequate supply for the current phase.

Customers are informed when parts are available for their vehicle. They then make an appointment with the Mercedes-Benz dealer and take the vehicle in, so an undue wait is not likely.

MistubishiYes

Airbag inflators are in inventory at all dealers. If for some reason an inflator is out of stock at a Mitsubishi dealership when a customer goes in for the free recall repair, the inflator will be available within 24 hours.

Nissan (Infiniti and Nissan)Yes

Repair parts are at Infiniti and Nissan dealers or distribution centers, available for immediate order. If the parts are not immediately available at the dealership, affected customers are being offered loaner vehicles.

SubaruYes

Customers can schedule repair time as soon as they’re notified; if they feel as though the process is taking too long, they can contact Subaru customer service at 800-782-2783.

TeslaDid not respond.
Toyota (Lexus, Scion, Toyota)YesOnce customers receive notification, they should contact their local authorized Toyota/Lexus dealer to schedule a free repair.