Battered by a massive global recall, Takata's liabilities are seen finally exceeding ¥1 trillion, the largest amount for any failed manufacturer in Japan since the end of World War II.
(AP Photo/Shizuo Kambayashi). Japanese air bag maker Takata Corp. has filed for bankruptcy protection in Tokyo and the USA,.
The money from the sale of the business to Key Safety Systems will be used to cover those and other costs resulting from the airbag recall.
The filings have, however, not resolved all issues. Takata was negotiating with other potential buyers - including market leader Autoliv Inc. of Sweden - months before reaching a deal with Key Safety.
2009: Ashley Parham, 18, dies when the Takata air bag in her 2001 Honda Accord explodes after her vehicle bumps into another auto in a parking lot.
Key Safety also plans to retain all Takata employees and maintain operations in Japan, including the opening of a new regional headquarters in Tokyo. The agreement is meant to allow Takata to continue operating without interruptions and with minimal disruptions to its supply chain. Also, three former Takata execs have been indicted about the safety defects.
But that figure is not expected to increase because of Takata's bankruptcy, Honda spokesman Kosuke Kachi said. The ammonium nitrate compound used in the airbags was found to become volatile with age and prolonged exposure to heat, causing the devices to explode. Isuzu says the problem was caught quickly so it doesn't send recall notices.
February 27, 2017: Takata pleads guilty to criminal charges in a US court, agreeing to pay $1 billion in penalties, and its chief financial officer says that the company's conduct has been "deeply inappropriate". U.S. auto safety regulators announced a record 200 million Dollars civil fine against Takata on November 4 for providing inadequate and inaccurate information about its dangerously explosive airbags installed in millions of cars. The airbag division has accounted for more than a third of total annual revenue around 663 billion yen, with seatbelts and steering wheels among its other key products. Takata already has paid $125 million into a fund for victims and a $25 million fine to the U.S. Justice Department.
Chinese-owned Key Safety Systems in Detroit, Michigan, a Takata rival, reached an agreement with the auto parts maker to buy most of its assets and acquire its manufacturing operations for about $1.6 billion.
The company had been seeking an out-of-court restructuring deal but found it hard to reach agreement with automakers that have covered the costs of replacing defective inflators.
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The airbag-maker filed for Chapter 11 with $10bln-plus of liabilities. But it's staying away from the parts that deal with the airbag inflators, which will eventually be wound down.
Industry sources say Takata would be able to complete the current global recall under bankruptcy, but could face problems if further recalls are required down the line.
"KSS is the ideal sponsor as we address the costs related to airbag inflator recalls, and an optimal partner to the company's customers, suppliers and employees", Takata CEO Shigehisa Takada said in a statement.
Honda uses Autolive and Daicel in most of its replacements for recalled Takata inflators too.
The Tokyo Stock Exchange suspended trading of Takata shares Monday and said it would delist Takata stock Tuesday.
Filing for bankruptcy will facilitate the restructuring of this debt, avail itself of the protection under the Japanese legislation and avoid insolvency, and they will request emergency financial assistance from Japanese entities to continue its activities, the company said.
Takata employs about 46,000 people globally with 56 factories in 20 countries, including the United States, Mexico and China, with about 663 billion yen ($5.95 billion) in annual revenue.
The company added that the bankruptcy proceedings should have no effect on the recall.
"It would be a big nuisance for the new company if a person like me were to get involved in its management", he said.
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