Japanese airbag maker Takata files for bankruptcy gets US sponsor

Monday 26 June 2017 4 months ago 52   Tokyo   Print

Report  Web Desk : TOKYO: Japans Takata Corp, the firm at the centre of the auto industrys biggest ever product recall, filed for bankruptcy protection in the United States and Japan, and said it would be bought for $1.6 billion by US-based Key Safety Systems. 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 airbags have been linked to at least 17 deaths around the world. TK Holdings, its US operations, filed 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. Takatas 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 Chinas Ningbo Joyson Electronic Corp. In a deal that took 16 months to hammer out, KSS agreed to take over Takatas viable operations, while the remaining operations will be reorganised to continue churning out millions of replacement airbag inflators, the two firms said. The US company would keep substantially all of Takatas 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 US 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. Takada said he and top management would resign when the timing of the restructuring is set. His family — which still has control of the 84-year-old company — likely would cease to be shareholders. Jason Luo, president and CEO of KSS, said in a statement the underlying strength of Takatas business had not diminished despite the airbag recall, citing its skilled employee base, geographic reach and other safety products such as seat belts. The companies expect to seal definitive agreements for the sale in coming weeks and complete the twin bankruptcy processes in the first quarter of 2018. The filings have, however, not resolved all issues. Honda Motor Co, Takatas biggest customer, said it had reached no final agreement with Takata on responsibilities for the recall. Honda said it would continue talks with the supplier but anticipated difficulties in recovering the bulk of its claims.