Japan's Takata files another attempt to stay U.S. air bag lawsuits

By David Shepardson

WASHINGTON (Reuters) - Japanese auto supplier Takata Corp filed for U.S. bankruptcy protection on Wednesday in an effort to pause lawsuits against the company over faulty air bag inflators - more than a month after its U.S. unit filed for bankruptcy in the same court.

In its filing with the U.S. Bankruptcy Court in Delaware, Takata said the Chapter 15 petition was critical to ensure the "continuation of Takata's business, preserving tens of thousands of jobs and ensuring that Takata's business partners continue to have access to critical components that ensure the safety of drivers worldwide."

The petition came as Takata's U.S. business separately asked a federal bankruptcy judge to suspend lawsuits against automakers that have been brought by air bag victims.

Major automakers including BMW AG , Ford Motor Co , Honda Motor Co Ltd and Toyota Motor Corp sided with Takata in backing a six-month delay in lawsuits.

Takata and automakers face hundreds of lawsuits including actions brought by Hawaii, the U.S. Virgin Islands, and New Mexico.

TK Holdings Inc, the company's primary U.S. unit, filed for Chapter 11 protection in June along with 11 other U.S. and Mexican entities, coinciding with Takata Corp's bankruptcy filing in Japan.

Takata said it faces tens of billions of dollars in liabilities from its inflators, which are subject to the biggest recall in automotive history.

At least 18 deaths and 180 injuries worldwide have been tied to a defect that can cause Takata inflators to explode with excessive force, unleashing metal shrapnel inside cars and trucks. Takata has said it expects 125 million vehicles worldwide to be recalled by 2019..

Bankruptcy automatically stayed hundreds of lawsuits against TK Holdings for wrongful death, injuries, economic loss and breach of consumer protection laws, and in July Takata's U.S. unit sought a preliminary injunction to suspend lawsuits against automakers that use its inflators.

The Chapter 15 filing seeks to stay suits against Takata Corp as well. An initial court hearing on the new petition is set for Friday.

Plaintiffs' lawyers called the requested injunction "an abuse of the bankruptcy laws for the benefit of all of the world's largest automobile manufacturers." They said Takata's request would delay consideration of plaintiff's lawsuits for six months or more.

Takata set aside $125 million to compensate those injured by its air bags as part of a guilty plea, but plaintiffs' lawyers argue it will not be enough.

Without the injunction, Takata said the litigation would distract management from completing the $1.6 billion sale of its viable operations to Key Safety Systems (KSS) and could threaten the supply of air bag inflators to replace recalled ones.

Takata said Wednesday it is in talks to finalise the terms of the agreements regarding the KSS asset sale "and with the support of a significant majority" of automakers "that will pave a path for a relatively quick and successful emergence" from bankruptcy restructuring. It hopes to complete the restructuring by the end of February.

(Reporting by David Shepardson Additional reporting by Jonathan Stempel in New York; Editing by Tom Brown)