Takata estate seeks at least $7.5 million from airbag part supplier

WILMINGTON, Del.—Takata Corp.'s bankruptcy estate seeks at least $7.5 million in a federal lawsuit against airbag inflator supplier ARC Automotive Inc., accusing the supplier of selling defective parts that triggered a major General Motors safety recall.

According to the complaint, filed June 24, the reorganized TK Holdings Trust claims that ARC Automotive in Wilmington, Del., breached a contract in which the supplier agreed and warranted that the inflators would be free from defects. Takata's bankruptcy estate was formed after the approval of Takata parent TK Holdings Inc.'s Chapter 11 reorganization plan and sale in February 2018. The Japanese supplier filed for bankruptcy in June 2017 and in 2018 its safety product business was acquired for $1.6 billion by Chinese-owned Key Safety Systems, which has since renamed the business Joyson Safety Systems.

Takata's defective airbag inflators prompted the largest recall in global automotive history, forcing 19 auto makers to recall some 100 million airbags worldwide. At least 24 fatalities and about 290 injuries globally have been linked to Takata's inflators, which exploded during accidents and spread shrapnel into passenger compartments. U.S. auto makers and regulators have been working for several years to get all affected airbags recalled and replaced.

New claims

The Takata estate claims that ARC's defective inflators caused its customer, GM, to recall vehicles made during the period the defective inflators were supplied by ARC.

Such court actions are common after major corporate bankruptcies as creditors try to recover as much money as legally possible.

"Pursuant to the terms of the parties' agreement, ARC is responsible for the costs, expenses and other losses incurred by TK Holdings, as a result of supplying defective inflators, including, but not limited to, shipping, labor, lab testing, sorting, plant closures, and the recall," Takata's trust wrote in the complaint. "As a direct and proximate result of ARC's breach of contract, warranties, and manufacturing defects, TK Holdings sustained losses of at least $7.5 million. This action seeks to recover these losses, plus the costs and expenses of this action, including attorney's fees."

The complaint was filed in U.S. District Court in Delaware.

Lawsuit accusations

TK Holdings Trust accuses ARC of breach of contract, breach of express warranty, breach of implied warranty, breach of warranty of fitness for a particular purpose, and manufacturing defect.

A pretrial conference is set for Aug. 28. An attorney for the TK estate could not be reached for comment. Attempts to reach ARC were unsuccessful.