Japan's embattled Takata Corp. said on Monday that it had filed for bankruptcy protection and would sell its business to a US third party, in what is the biggest corporate failure ever of a Japanese manufacturer.
The company is also selling off its remaining operations to rivals, namely Chinese-owned Key Safety Systems which is based in MI.
"Although Takata has been impacted by the global airbag recall, the underlying strength of its skilled employee base, geographic reach, and exceptional steering wheels, seat belts and other safety products has not diminished", said Key Safety Systems CEO Jason Luo. Its shares were suspended Monday because they're going to be delisted, the Tokyo Stock Exchange said.
More than 100 million cars with Takata airbags, including around 70 million vehicles in the United States, have been recalled since 2007.
The recalls began in 2008 and are expected to cost the embattled maker in the region of 10 billion USA dollars, according to industry sources familiar with the matter.
"It's likely every automaker involved in this recall will have to subsidize the process because the value of Takata's assets isn't enough to cover the costs of this recall", said Karl Brauer, executive publisher of Kelley Blue Book and Autotrader.
Hiroshige Seko, minister of economy, trade and industry, told a press conference Monday that he had instructed his ministry to establish a "safety net" as Takata's bankruptcy will adversely affect a number of small- and medium-sized enterprises (SMEs) beyond the auto industry that rely on Takata.
Toyota Motor Corp., for its part, has said it is not sure whether it will be able to receive the 570 billion yen in recall fees owed by Takata.
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Both Takata and KSS say that the US and Japanese filings should have "no effect" on access to replacement inflators.
The company paid $125 million to people injured by the airbags and $850 million to carmakers that used them. The scope of the recalls means some vehicle owners face lengthy waits for replacement parts, meanwhile driving cars with air bags that could malfunction in a crash. The chemical can deteriorate when exposed to hot and humid air and burn too fast, blowing apart a metal canister.
In February, Takata pleaded guilty to one count of wire fraud and was sentenced to pay a total of $1 billion in criminal penalties related to the sales of defective airbag inflators.
That settlement will speed the removal of faulty inflators from 15.8 million vehicles and compensate consumers for economic losses, Prieto said. Its global headquarters and USA technical center is in Sterling Heights, Michigan. The Chapter 11 bankruptcy in DE listed more than $10 billion in liabilities, including claims from automakers including Honda Motor Co. - the biggest user of the airbags - and Toyota Motor Corp.as well as individuals who have brought class-action lawsuits.
Seko said he hopes that Key Safety Systems Inc. will fix Takata's battered finances and that he "expects a quick turnaround".
The Takata corporate name may not live on after the bankruptcy.
He added, "we look forward to finalizing definitive agreements with Takata in the coming weeks, completing the transaction and serving both our new and long-standing customers while investing in the next phase of growth for the new KSS".
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