Japanese air bag maker Takata has filed for bankruptcy after drowning in lawsuits and recall costs over defective air bag inflators. Millions of replacement parts continue to be produced by another company.
Takata Corp filed for bankruptcy protection in Japan on Monday with $9 billion (10.1 billion euros) in liabilities, public broadcaster NHK reported.
Takata's US subsidiary is also to file for Chapter 11 bankruptcy in the United States on Monday with $10 billion to $50 billion in liabilities, according to court documents.
At its height, Takata had production facilities on four continents, with its European headquarters in Germany where it also had nine production centers. The company was founded in 1933, producing lifelines for parachutes and later on car seat belts and associated products.
KSS expected to buy Takata operations
Michigan-based Key Safety Systems (KSS), which is owned by Chinese supplier Ningbo Joyson, is expected to purchase Takata operations as it has to continue to produce millions of replacement air bag inflators.
One of the world's biggest automotive suppliers, problems for Takata started in 2008 when it was forced to recall around 100 million airbag inflators around the world used by 19 automakers, including Honda, Ford, Volkswagen and BMW.
The air bag inflators can potentially explode in a collision, spraying metal fragments towards drivers as well as passengers. At least 16 deaths and more than 180 injuries have been linked to the defects globally.
Fines and compensation
Some $1 billion from the sale to KSS is expected to go to settle criminal charges in the United States. Takata agreed to plead guilty to criminal wrongdoing and pay a $25 million fine to resolve a US Justice Department investigation.
On top of this, the company agreed to pay $125 million to a victims' compensation fund. Also at stake is $850 million owed by Takata to major global automakers under a settlement stemming from the automotive industry's largest ever safety recall.
It is unclear what the remaining $600 million will be used for.
So far more than 65 percent of the 46.2 million recalled airbag inflators in the United States have not been repaired, meaning there could be future deaths and injuries there and in other countries.
cw/jm (Reuters, AP)