Dayton Daily News
June 26, 2017
Drowning in a sea of lawsuits and recall costs, Japanese air bag maker Takata Corp. filed for bankruptcy protection in Tokyo and the United States early today.
The company announced the expected action this morning Tokyo time. Takata confirmed that most of its assets will be bought by rival Key Safety Systems, based in suburban Detroit.
Takata was done in by defective air bag inflators that can explode with too much force, spewing out shrapnel. They’re responsible for at least 16 deaths and 180 injuries and have touched off the largest automotive recall in U.S. history. So far, 100 million inflators have been recalled worldwide including 69 million in the United States, affecting 42 million vehicles.
Key will buy most of Takata’s assets for $1.6 billion and take over its manufacturing operations to make seat belts, air bags and other automotive safety devices, according to two people briefed on the matter.
Some remnants of Takata will be folded into an entity with a different name to keep manufacturing inflators used as replacement parts in recalls, said the people, who didn’t want to be identified because the bankruptcy terms have not been made public.
The recalls, which are being handled by 19 affected automakers, will continue.
At the end of April, only 22% of the 69 million recalled inflators in the United States had been replaced under the recalls, leaving almost 54 million on the roads, according to the National Highway Traffic Safety Administration website. This means more inflators will likely explode and more people will be hurt in the future, lawyers say.
At least $1 billion from the sale will be used to satisfy Takata’s settlement of criminal charges in the United States for concealing problems with the inflators. It was unclear what the rest of the money paid by Key will be used for. Key is owned by Ningbo Joyson Electronic Corp. of China.
One of the people briefed on the filings said that Key would get Takata’s assets “free and clear” of past or future liabilities. That makes it unclear whether anyone injured by inflators in the future would have any legal recourse against either company.
In February, Takata pleaded guilty to fraud and agreed to the $1 billion settlement. Lawyers acknowledged in court that the company would have to be sold to fund the settlement. Automakers would get $850 million in restitution for recall costs and a $25 million fine would be paid to the government. Takata already has paid $125 million into a fund for victims.
Copyright 2017 Dayton Newspapers, Inc.
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