Japan's crisis-hit vehicle parts maker Takata filed for bankruptcy protection Monday and said its chief executive would quit after a deadly airbag crisis that triggered the auto industry's biggest ever safety recall.
Key Safety Systems (KSS), the mobility safety equipoment supplier headquartered in Michigan, USA, and Takata Corporation have announced today that they have reached an agreement in principle to sponsor a restructuring plan for the purchase of substantially all of Takata's global assets and operations by KSS for an aggregate purchase price of $1.588 billion.
Drowning in a sea of lawsuits and recall costs, Japanese air bag maker Takata Corp.is expected to seek bankruptcy. The defect, which triggered the largest recall in USA history, been linked to at least 16 deaths and more than 180 injuries.
May 2015: Takata admits its air bags are defective and doubles recalls to 34 million inflators in the U.S. As a result, automakers will be forced to deal with much of the financial burden for the recalls.
And U.S. lawmakers have criticized Takata's slow pace of addressing the recalls.
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Global transport authorities have ordered about 100 million inflators to be recalled, as the ammonium nitrate compound used to inflate has been found to become volatile with age and prolonged exposure to heat, causing the devices to explode.
US lawmakers have criticized the pace of the recalls.
The National Highway Traffic Safety Administration (NHTSA) has repeatedly said it was taking action to speed up the course of the repairs. The chemical can deteriorate when exposed to hot and humid air and burn too fast, blowing apart a metal canister.
Takata faces billions in lawsuits and recall-related costs to its clients, including Honda, BMW, Toyota Motor Corp (TM.N), which have been paying recall costs to date. "All vehicle owners should regularly check their vehicles for recalls at SaferCar.gov and go get them fixed at no cost as soon as replacement parts are available". The money will be paid in various accounts with $850 million going to auto manufacturers to fix the unsafe airbags, $125 million to the victims, and $25 million to the government.
Takata filed for bankruptcy protection Monday and agreed to be bought by a United States firm, signalling the end of the road for the Japanese airbag maker at the centre of the biggest-ever auto safety recall. In addition, Takata said it had obtained financing of up to $227 million from the Japanese Sumitomo Mitsui Banking Corp. Key said it wouldn't cut any Takata jobs or close any facilities. "One gentleman cannot smile anymore".
In February, Takata pleaded guilty to fraud and agreed to the $1 billion settlement.
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The lead attorney for people suing the automakers said in a statement following the announcement that he doesn't expect the bankruptcy to affect the pending claims against the companies.
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".
Jason Luo, president and chief executive of KSS, which is owned by China's Ningbo Joyson Electronic, voiced confidence in Takata's rehabilitation.
However, operations linked to the defective airbags will not become part of the combined company, which "will be run by reorganised Takata. and eventually will be wound down".
Parts are not yet available for some models, and other models haven't been recalled yet.
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