Airbag maker Takata expected to file for bankruptcy protection
- Author: Zachary Reyes Jun 26, 2017,
Jun 26, 2017, 7:23
DETROIT (AP) - Japanese air bag maker Takata Corp. filed for bankruptcy protection in Japan and the USA, acknowledging that the financial problems caused by millions of faulty air bag inflators that can kill or injure people were too much to overcome.
Japan's crisis-hit vehicle parts maker Takata said Monday it has filed for bankruptcy protection and its chief executive would quit, after a deadly airbag defect triggered the auto industry's biggest ever safety recall.
The company announced the move Monday morning Tokyo time.
Takata's assets are expected to be sold for $1.6 billion to a rival company, Key Safety Systems, and part of Takata will remain under a different name to make replacement inflators for the recalls.
Automakers have already shifted business away from Takata and toward rivals for about 70 percent of the parts to fix defective airbag inflators, which can explode and cause death or injury with shrapnel, Bloomberg reported.
Takata's products, which can malfunction sending shards of metal at drivers and passengers, have been linked to at least 17 deaths worldwide. The company acknowledged that it manipulated testing data that it provided to automakers, convincing them to buy Takata's airbags over those made by other manufacturers.
So far more than 65 percent of the 46.2 million recalled airbag inflators in the United States have not been repaired, meaning there could be future deaths and injuries there and in other countries.
The recalls, which are being handled by 19 affected automakers, will continue.
USA lawmakers have criticized the pace of the recalls. The National Highway Traffic Safety Administration (NHTSA) has an $180 million claim for fines and penalties.
Three independent reports concluded that the chemical Takata uses to inflate its air bags - ammonium nitrate - can degrade after long-term exposure to environmental moisture and high temperatures. The chemical can deteriorate when exposed to hot and humid air and burn too fast, blowing apart a metal canister. Of that amount, $850 million goes to automakers to cover their costs of the recalls. Takata agreed to plead guilty to criminal wrongdoing and pay a $25 million fine to resolve a US Justice Department investigation. One 26-year-old plaintiff will never be able to smile due to nerve damage, his attorney says.
Even so, Key Safety, the world's fourth-largest air bag maker bought by Ningbo Joyson past year, would gain greater access to Japanese automakers and the combined entity would pull closer in market share to leader Autoliv Inc.
Fallout from the bankruptcy filing came swiftly from the Tokyo Stock Exchange, which said it was stripping the company founded in 1933 from trading as of Tuesday.
Key said it will not cut any Takata jobs or close any of its facilities.
This means more inflators are likely to explode and more people will be hurt, lawyers say.
Takata also made a filing in Japan on Monday.