Economy

Takata Decides to File for Bankruptcy Protection (News)

Takata Decides to File for Bankruptcy Protection (News)”

The filing at the Tokyo District Court followed a Chapter 11 bankruptcy protection filing in the United States.

Key Safety Systems, a Chinese-owned company based in MI, is paying $1.6 billion for almost all of Takata's operations. The move clears the way for Takata to get out from under its mounting liabilities and restructure, but could leave carmakers holding the bag.

So far 100 million inflators have been recalled worldwide, the largest automotive-related recall in USA history.

But that figure is not expected to increase because of Takata's bankruptcy, Honda spokesman Kosuke Kachi said. "We anticipated difficulty in claiming compensation", Kachi said. Honda will continue to replace recalled inflators, despite the bankruptcy, he said. That amount could increase if further recalls are necessary, it warned. The VIN check page will be updated as automakers announce more recalls.

Takata's total liabilities stand at 1.7 trillion yen ($15 billion), Tokyo Shoko Research Ltd estimated. He said progress of the recalls in other countries was unknown.

FSMNews

So far, it has disclosed setting aside 90 billion yen ($809.0 million) for potential costs. It has earmarked another 41.5 billion yen ($373.0 million) in the current fiscal year ending March 31, 2018, and the fiscal year after that.

The companies said the transaction "is meant to minimize supply chain disruption concerns for Takata's OEM customers", ensuring that the recall effort is completed in a timely manner. "We look forward to finalizing definitive agreements with Takata in the coming weeks, completing the transaction and serving both our new and long-standing customers while investing in the next phase of growth for the new (Key Safety)".

Earlier this year, Takata admitted to manipulating and withholding key information about the faulty inflators for years, even after they started exploding in people's cars.

The Japanese company had been struggling to fund the recall of more than 100 milion airbags that contain ammonim nitrate inflators, which can explode and hurl tiny bits of shrapnel-like metal into the passenger compartment.

The Japanese firm is now supplying only 25% of the replacement inflators, according to Upham, with rival companies providing the rest.

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Honda uses Autolive and Daicel in most of its replacements for recalled Takata inflators too.

Takata's troubles stem from use of the explosive chemical ammonium nitrate in the inflators to deploy air bags in a crash.

First, they are newer and haven't had prolonged exposure to heat and humidity.

Millions of airbags produced for some of the largest automakers, including Toyota and General Motors, are being recalled because of the risk that they could improperly inflate and rupture, potentially firing deadly shrapnel at the occupants.

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.

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