The bankrupt air bag maker Takata and its U.S. subsidiary, TK Holdings, have reached a $650 million settlement agreement with 44 states, including New Jersey and the District of Columbia, over claims that the manufacturer concealed safety defects related to its vehicle air bag system.

The states and D.C., however, have agreed not to accept the money and instead will have the funds placed into an account so that plaintiffs pursuing private claims can receive larger settlements.

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The South Carolina Attorney General's Office, which led the pursuit of the claims, will receive about $139,000 to cover its litigation costs, according to a report by The Associated Press. At least 22 people have been killed and about 180 injured worldwide because of the defective air bags, the AP said.

“TK Holdings and its parent company betrayed the trust of countless consumers in New Jersey and across the nation by knowingly allowing them to purchase vehicles with defective air bags—air bags capable of maiming or killing vehicle occupants,” said New Jersey Attorney General Gurbir Grewal in a statement.

“This settlement is designed to protect consumers by putting in place terms to ensure the company will do what it is supposed to do going forward,” Grewal said. “That means continuing to work with auto manufacturers in order to replace its faulty air bags, compensating victims harmed by the failure of those defective air bags, and conducting any future business honestly, transparently, and in compliance with state and federal law.”

Earlier this month, a group of about 40 private plaintiffs reached a settlement with the company, which filed for bankruptcy in June, that could provide up to $130 million in compensation to victims of exploding air bags.

The settlement with the attorneys general announced today resolves an investigation by the states into the company's failure to timely disclose known defects associated with air bag inflators containing phase-stabilized ammonium nitrate as a propellant.

Beginning in 2008, automakers issued a number of recalls of vehicles containing Takata air bag inflators in response to incidents in which the air bags ruptured on deployment.

The defect involves use by the manufacturer of phase-stabilized ammonium nitrate to inflate the air bags on deployment. As the compound is exposed to heat and humidity over time—particularly in warmer and wetter regions—the propellant degrades. The inflator is then susceptible to explosive rupture on deployment. When a rupture occurs, the force of the blast can destroy the metal casing around the propellant, which can then spew shrapnel inside a vehicle's passenger cabin.

To date more than 50 million Takata air bags in more than 37 million vehicles have been recalled, with future projected recalls, through the end of 2019, likely bringing the total number of affected air bags to somewhere between 65 and 70 million, according to a statement released by the New Jersey Attorney General's Office.

The attorneys general participating in the multistate investigation alleged that TK Holding's parent company, Japan-based Takata, knew the air bag inflator posed a safety threat because of testing failures. In particular, Takata knew about several ruptures that occurred as early as 2004, but failed to properly notify regulators and the public of the serious danger posed by the defect.

Takata, the statement said, admitted to manipulating testing data and submitting false and misleading reports to auto manufacturers as part of a criminal guilty plea in federal court last year.

A consent decree and settlement agreement outlining the terms has been presented to the U.S. Bankruptcy Court for the District of Delaware for approval. Under the settlement, TK Holdings and its successor, Reorganized TK Holdings, will:

• Not advertise or otherwise represent the safety of its air bag systems or phase-stabilized ammonium nitrate in any way that is false, deceptive or misleading;

• Not represent that its air bags are safe unless supported by competent and reliable scientific or engineering evidence;

• Not falsify or manipulate testing data, or provide any testing data that the companies know is inaccurate;

• Except as needed to fulfill its obligations under the various recalls, sell any air bag systems using phase-stabilized ammonium nitrate as a propellant;

• Comply with state and federal law as well as the National High Consent Order and Coordinated Remedy Order; and

• Continue to cooperate with auto manufacturers to ensure that replacement air bag inflators are made available as expeditiously as possible from all possible sources.