Coda Files Request to Recall Sedans Despite Bankruptcy

Coda Files Request to Recall Sedans Despite Bankruptcy

Although the company filed for Chapter 11 bankruptcy months ago, Coda Automotive wants to recall its single product to replace the side curtain airbags.

Coda has filed a request with the United States Bankruptcy Court for the District of Delaware to conduct a voluntary recall of Coda Sedans that will not exceed a total cost of $40,000. Because the company is bankrupt, it can’t fund the recall itself, but the companies debtors in possession have agreed to use their cash collateral to conduct the recall.

But why is it so cheap? According to the request filed by Coda, the company only ever sold “fewer than 100 Coda Sedans.”

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In National Highway Traffic Safety Administration testing, the Coda Sedan’s side-curtain airbags did not deploy as intended, resulting in sub-par safety performance. Coda wants to perform the recall to “protect the Coda name for the benefit of the Debtors’ estates,” along with providing safety to Coda Sedan owners. In addition, the recall keeps Coda in good favor with NHTSA, and also allows another company to buy out Coda and continue operations.

[Source: Chapter 11 Cases]