Japan’s Takata Corp., the firm at the centre of the auto industry’s biggest-ever product recall, filed for bankruptcy protection in the United States and Japan, and said it had agreed to be largely acquired for $1.6 billion by the Chinese-owned U.S.-based Key Safety Systems.
Linked to 16 deaths
In the biggest bankruptcy of a Japanese manufacturer, Takata faces tens of billions of dollars in costs and liabilities resulting from almost a decade of recalls and lawsuits. Its airbag inflators have been linked to at least 16 deaths and 180 injuries around the world because they can rupture and send metal fragments flying.
TK Holdings, its U.S. operations, filed for Chapter 11 bankruptcy in Delaware on Sunday with liabilities of $10 billion to $50 billion, while the Japanese parent filed for protection with the Tokyo District Court early on Monday.
Scott Caudill, chief operating officer of TK Holdings, said in a court affidavit that the company “faces insurmountable claims” relating to the recalls and owes billions of dollars to automakers.
He disclosed that Takata has recalled, or expects to recall, by 2019 about 125 million vehicles worldwide, including more than 60 million in the U.S.
Takata’s total liabilities stand at 1.7 trillion yen ($15 billion), Tokyo Shoko Research Ltd. estimated.
Final liabilities would depend on the outcome of discussions with carmaker customers who have borne the bulk of the replacement costs, a lawyer for the company said. The filings open the door to the financial rescue by Key Safety Systems (KSS), a Michigan-based parts supplier owned by China’s Ningbo Joyson Electronic Corp.
In a deal that took 16 months to hammer out, KSS agreed to take over Takata’s viable operations, while the remaining operations will be reorganised to continue churning out millions of replacement airbag inflators, the two firms said.
‘Jobs retained’
The U.S. company would keep “substantially all” of Takata’s 60,000 employees in 23 countries and maintain its factories in Japan. The agreement is meant to allow Takata to continue operating without interruptions and with minimal disruptions to its supply chain. “We believe taking these actions in Japan and the U.S. is the best way to address the ongoing costs and liabilities of the airbag inflator issues with certainty and in an organised manner,” Takata CEO Shigehisa Takada said in a statement.
