DOVER, Del. — A Delaware bankruptcy judge on Wednesday temporarily halted the prosecution of lawsuits filed by Hawaii, New Mexico and the U.S. Virgin Islands against Japanese auto-parts supplier Takata over its lethally defective air bag inflators.
Judge Brendan Shannon ordered the 90-day stay after hearing arguments last week on Takata’s request to halt hundreds of air bag-related lawsuits for six months while it works on a reorganization plan. Takata’s restructuring efforts include the planned sale of most of its assets to a Chinese-owned rival for $1.6 billion.
Shannon also granted Takata’s request to temporarily halt individual lawsuits against automobile manufacturers who installed the faulty air bags but, again, only for 90 days. He refused, however, to extend that ruling to scores of lawsuits consolidated in a federal multidistrict litigation case in Miami.
While acknowledging and expressing sympathy for the circumstances facing many claimants, including those grievously injured and survivors of those who have been killed, Shannon said Takata had met its burden of proving that a halt to litigation was warranted.
The company was forced into bankruptcy in June amid personal injury and economic loss lawsuits, multimillion-dollar fines and crushing air bag recall costs. Takata’s air bag inflators can explode with too much force, spewing shrapnel into riders. At least 16 people have died and more than 180 have been injured because of the problem. The inflators have prompted the largest automotive recall in U.S. history, with more than 45 million being called back for repairs.
“The debtors are engaged … in the largest recall in history while simultaneously trying to implement a reorganization strategy around the globe,” Shannon noted.
The judge also said that a failed reorganization could negatively affect the recall effort. Takata’s bankruptcy is unique in that the automobile manufacturers play a critical role as both its largest customers and largest creditors.
“What the debtors seek and need is a breathing spell,” Shannon said.
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