Chinese tire recall to start Monday

NEW YORK (CNNMoney.com) -- The company that imported Chinese tires at the center of a recall demand by the National Highway Traffic Safety Administration will recall the tires and replace them until the company, Foreign Tire Sales (FTS), has run out of funds.

A lawyer for FTS said the company will begin notifying owners of the tires on Monday and will continue the recall until the company has run out of money.

Once the company has replaced as many of the tires as it can, the company will have to declare bankruptcy.

Lawrence Levigne, the attorney representing the New Jersey-based distributor of the imported tires, estimated that the company has enough funds to replace about 10 percent of the 450,000 tires that may be defective.

The tires, made by China-based Hangzhou Zhongce Rubber Co., have an insufficient or missing gum strip, a rubber feature that helps prevent steel belts inside the tire from separating or from damaging the rubber.

FTS alerted NHTSA to the problem in an official document filed in June. NHTSA responded by ordering a recall. Failure to recall the tires could result in fines for the importer, NHTSA reminded in a letter faxed to the company yesterday.

"At the risk of putting ourselves out of business, this company did the right thing and we reported [the problem]," said Levigne, who faults NHTSA for not doing more to help the company correct the problem.

Heather Hopkins, a spokeswoman for NHTSA, responded that NHTSA does not have the resources to help companies carry out recalls even if it puts the company at an extreme financial hardship.

"We don't have the mechanism to pay for a business to continue being in business," she said.

In statements made to the New York Times and Wall Street Journal, Hangzhou Zhongce has denied that the tires are defective.