Sunday 22 October 2017

Airbag scandal firm Takata files for bankruptcy

Takata CEO Shigehisa Takada bows as he attends a press conference in Tokyo
Takata CEO Shigehisa Takada bows as he attends a press conference in Tokyo

Ma Jie and Emi Nobuhiro

Takata has filed for bankruptcy protection in the biggest postwar Japanese corporate failure in the manufacturing industry, as the 84-year-old company buckled under liabilities from millions of recalled airbags that have been linked to more than a dozen deaths.

The Tokyo-based company and its units filed for creditor protection in the US and Japan.

The Chapter 11 bankruptcy in Delaware listed more than $10bn in liabilities, including claims from automakers including Honda - the biggest user of the airbags - and Toyota as well as individuals who have brought class-action lawsuits.

The filing is the culmination of a saga that began with a recall more than eight years ago but has spiralled as the company's malfunctioning airbag inflators - which sent shards of metal at drivers and passengers - have been linked to at least 17 deaths worldwide.

It also removes the final hurdle for the supplier to be acquired by Key Safety Systems, a unit of China's Ningbo Joyson Electronic, for 175bn yen (€1.43bn).

"We were facing a severe situation and we weren't able to wait any longer," Takata Chairman and CEO Shigehisa Takada told a briefing in Tokyo yesterday. The 51-year-old will step down after handing over the company to its new management.

The sale to Key Safety and the bankruptcy proceedings are expected to be completed by the first quarter of next year, Takata said in a statement.

Key Safety will substantially retain all of Takata's employees worldwide. The airbag maker had 50,530 people as of March 2016, according to data compiled by Bloomberg.

Seventeen carmakers including BMW and Tesla were listed as unsecured creditors with unknown claims related to recalls and indemnification, according to the filing.

Litigation claims included those from class action plaintiffs in the US and Canada, and the attorney general of the US Virgin Islands.

The US National Highway Traffic Safety Administration has an $180m claim for fines and penalties.

Takata is unable to disclose the total of its liabilities as the company hasn't reached an agreement on how to split the recall costs with the automakers, Nobuaki Kobayashi, a member of Takata's steering committee, said at the news conference.

Key Safety's purchase will exclude the assets and operations related to Takata's manufacturing and sale of ammonium nitrate air-bag inflators, according to the company.

The chemical is at the heart of the recall crisis, degrading over time under conditions of heat and humidity and resulting in uncontrolled explosions that ruptured airbag parts.

The inflator operations are expected to be run by a reorganised Takata following the transaction closing and eventually will be wound down, the companies said. (Bloomberg)

Irish Independent

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