Shattered by recall costs and lawsuits, Japanese air bag maker Takata Corp. filed Monday for bankruptcy protection in Tokyo and the US, saying it was the only way it could keep on supplying replacements for faulty air bag inflators linked to the deaths of at least 16 people.
Under the deal, Sterling Heights based-Key Safety proposed to acquire all global Takata assets and operations, except those tied to the phase-stabilized ammonium nitrate airbag inflators business.
Seko also said he wanted to closely monitor liquidity and funding conditions for small companies that dealt with Takata.
Trouble for Takata started after defects in its airbags were linked to 11 deaths in the United States along with 5 in Malaysia, sparking a massive recall that is expected to extend to over 100 million units at a cost of more than ¥1 trillion.
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Takata said Monday it's seeking bankruptcy protection both in Japan, where it's based, and in the U.S.
"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.
Its shares were suspended Monday because they're going to be delisted, the Tokyo Stock Exchange said. So far 100 million inflators have been recalled worldwide including 69 million in the US, affecting 42 million vehicles.
The vehicles being recalled have Takata inflators without the dessicant, and Honda says there is no immediate need to call back and replace inflators that have the added safety measure.
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The bankruptcy filing lists unsecured creditors including 17 automakers, including Honda, Toyota and BMW, as unsecured creditors, along with NHTSA, which is owed $180 million in fines and penalties, and the hundreds of plaintiffs who have filed individual and class-action lawsuits against Takata. Automakers would get $850 million in restitution for recall costs and a $25 million fine would be paid to the government.
Takata has 12 overseas subsidiaries that have also filed for bankruptcy protection.
Nissan does not disclose whether it continues to use Takata inflators but said it has established new supply lines for the component and is working with alternative suppliers to "develop new inflators for prompt rollout in future vehicles". It is owned by China's Ningbo Joyson Electronic Corp.
"The sad saga of Takata. has resulted in the implosion of one of the automotive industry's oldest and most successful suppliers due to technical hubris, mismanagement and a systemic corporate culture of manipulation", said Scott Upham, the CEO of Valient Market Research.
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The deal is expected to close in the first quarter of 2018, Key Safety said. "We hope the day will come when the word "Takata" becomes synonymous with 'safety, '" the website says. The ammonium nitrate compound used in the airbags can become volatile with age and prolonged exposure to heat, causing the safety devices to explode. For many models, dealers have ample parts in stock.
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