Drowning in a sea of lawsuits and recall costs, Japanese air bag maker Takata Corp.is expected to seek bankruptcy protection in Tokyo and the United States early Monday, June 26, 2017. Japanese air bag maker Takata Corp. filed for bankruptcy protection in Tokyo on Monday, June 26, 2017 and the US, drowned in a sea of lawsuits and recall costs.
The company announced the move Monday morning Tokyo time.
Takata confirmed that most of its assets will be bought by rival Key Safety Systems, based in suburban Detroit.
Automakers have already shifted business away from Takata and toward rivals for about 70 percent of the parts to fix defective airbag inflators, which can explode and cause death or injury with shrapnel, Bloomberg reported. At least 16 people have been killed worldwide.
Another $125 million will go to victims and Takata will pay a $25 million fine to the US government.
The recalls, which are being handled by 19 affected automakers, will continue.
"Although Takata has been impacted by the global airbag recall, the underlying strength of its skilled employee base, geographic reach and exceptional steering wheels, seat belts and other safety products have not diminished", Jason Luo, president and CEO of Key Safety, said in a statement.
The air bags are prone to erupting - particularly after years of the ammonium nitrate propellant in their inflators degrading in warm, humid conditions - and hurling fiery shrapnel into drivers and passengers. Although Takata will use part of the sale proceeds to reimburse the automakers, experts say the companies still must fund a significant portion of the recalls themselves.
US drivers can log onto www.safercar.gov to search for recalls affecting their auto using its 17-digit vehicle identification number, which is located on the driver's side of the dashboard near the windshield. The settlement included a $25 million criminal fine, $125 million in victim compensation and $850 million to compensate automakers who have suffered losses from massive recalls.
The filing at the Tokyo District Court followed a Chapter 11 bankruptcy protection filing in the United States.
Key, a Chinese company with worldwide operations, makes inflators, seat belts and crash sensors for the motor industry. It is owned by China's Ningbo Joyson Electronic Corp.
KSS said it would retain nearly all of Takata's employees and did not intend to close any of the company's manufacturing facilities.
Al Jazeera's Wayne Hay, reporting from Tokyo, says filing for bankruptcy offers Takata some protection going forward, and it makes the company's affairs more ransparent, while allowing for a bailout.
No. If you're in a crash, it's far more likely that the air bag will protect you than hurt you. The automaker later became its biggest customer, a relationship that came back to bite Honda when Takata became embroiled in its defective inflator scandal.