Sci-tech

Airbag-maker Takata files for bankruptcy in Japan, US

Japan's crisis-hit vehicle parts maker Takata said Monday it has filed for bankruptcy protection and its chief executive would quit, after a deadly airbag defect triggered the auto industry's biggest ever safety recall.

Takata is expected to file for a U.S. Chapter 11-style bankruptcy protection procedure, along with a similar filing in the United States, sources have told Reuters.

The company's executives sought to reassure their customers, suppliers and shareholders in a news conference on Monday.

The faulty products can explode with too much force, shooting out fragments that could, and did, harm vehicle occupants.

A billboard advertisement of Takata Corp is pictured in Tokyo September 17, 2014. Besides the fatalities, they're also responsible for at least 180 injuries, and touched off the largest automotive recall in US history.

Global transport authorities have ordered about 100 million inflators to be recalled.

February, 2016 - Takata names an outside steering committee to develop a comprehensive restructuring plan while continues to supply recall inflators. The recalls, being handled by 19 affected carmakers, will continue. "Although we have acquired the right to be reimbursed for the costs of both past and future recalls from Takata and its affiliates, following Takata's filing, it is likely that we will not be able to exercise this right in most cases", Nissan said.

Takata's problem is the same that it has been ever since its air-bag inflators started malfunctioning in 2004: There's been no full accounting of the scope of its recall and potential class-action payouts.

They include billions being claimed by vehicle industry giants such as Honda, BMW, Toyota and others, which have borne the cost of recalls to date. Liabilities don't simply disappear: Indeed, recall obligations are treated as a claim of the US government, ranking ahead of other creditors in the queue for payouts.

November 2009: The National Highway Traffic Safety Administration opens an investigation into Honda's handling of the recalls but later determines that the automaker had acted responsibly.

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The defect in the inflators stems from use of the explosive chemical ammonium nitrate to deploy air bags in a crash.

Takata has already agreed to pay a billion-dollar fine to settle with United States safety regulators over its airbags. Takata already has paid $125 million into a fund for victims.

Its shares were suspended Monday because they're going to be delisted, the Tokyo Stock Exchange said.

Takada said he intends to leave Takata's management once it is handed over to Key Safety Systems and things are running smoothly.

For Key Safety, Takata's other assets, such as its seatbelt business, are of importance as the company hopes to leverage Takata's assets.

This would open the door for a financial rescue from USA auto parts supplier Key Safety Systems, which Takata has tapped as its preferred financial sponsor.

News reports have said its liabilities would exceed one trillion yen ($9bn).

Key, a Chinese company with global operations, makes inflators, seat belts and crash sensors for the auto industry.

Takata has 12 overseas subsidiaries that have also filed for bankruptcy protection. Takata says the passenger side air bags contain an improper amount of generant, which produces the gas that makes them inflate. CEO Shigehisa Takada speaks during a press conference in Tokyo, Monday, June 26, 2017.

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