Takata Corp files for bankruptcy, gets backing from Key Safety Systems


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.

Defective airbags made by Takata have been tied to 11 deaths and more than 180 injuries in the United States alone.

TK Holdings, its USA operations, submitted Chapter 11 bankruptcy in DE on Sunday with liabilities of $10 billion to $50 billion, where as the Japanese parent filed for protection with the Tokyo District Court today.

Scott Caudill, chief operating officer of TK Holdings, said in a court affidavit that the company "faces insurmountable claims" relating to the recalls and owes billions of dollars to automakers.

The inflator recall, which is being done in phases to prioritize the riskiest vehicles, affects 46 million driver- and front passenger-side inflators in 29 million vehicles in the USA after a massive expansion previous year.

Takata's overall liabilities stand at 1.7 trillion yen ($15 billion), Tokyo Shoko Research study 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.

Honda, which has the largest number of recalled vehicles, now has been able to source all fix inflators from other suppliers, but more than a dozen other global automakers still are getting at least some of the parts from Takata.

More news: UK Parliament: At least 90 email accounts hit by cyber attack

The faulty air bags are believed to have been manufactured between 2000 and 2008 in Takata's United States factory.

"We're in a very hard situation, and we had to find ways to keep supplying our products", Takada said.

The CEO of Takata, who has long pushed back the scenario of bankruptcy, refused to let go the reins, officially welcomed the choice of KSS, "an ideal takeover".

Earlier in the year Takata pleaded guilty to a felony charge in a USA court as part of a $US1 billion ($A1.3 billion) settlement deal with the justice department that includes compensation funds for victims of the defective airbags, and the manufacturers who used them.

Carmakers, for one. Major manufacturers including Honda, Toyota and Fiat Chrysler are among Takata's biggest unsecured creditors, according to court documents.

Takata is still in the process of replacing the recalled airbags, found in 34 types of US vehicles, according to the National Highway Traffic Safety Administration, and the cost has been mounting. Honda officials in Japan said the company had expected it would be hard to secure compensation from Takata, according to Reuters.

"It's not just Honda either, it's nearly all other manufacturers are affected by this so if you're driving an older vehicle go ahead and have that VIN checked if you've never had it checked call a dealership or go on Carfax and pull it up from there", he said. General Motors Co also said it is not expecting any supply disruptions and that any material financial impact from the recalls would be reflected in its financial reports. Other manufacturers are also supplying replacement air bags. "We hope the day will come when the word "Takata" becomes synonymous with 'safety, '" the website says.

The company is due to be delisted from the Tokyo Stock Exchange on July 27.