Takata Bankruptcy: Japanese Airbag Maker Files for Chapter 11 Protection
- Author: Angelo Rivera Jun 30, 2017,
Jun 30, 2017, 0:16
As reported by Reuters, Takata has been at the centre of an ongoing safety scandal for well over a decade, after defective airbags built by the company were linked to at least 17 deaths. Settlement agreements with Toyota, Subaru, BMW and Mazda have already received preliminary approval from the MDL Court, and will accelerate the removal of risky airbag inflators from 15.8 million vehicles and compensate consumers for economic losses associated with the recall.
The company's air bags are used on vehicles for almost all of the world's major automakers, affecting about one-quarter of all vehicles on the road in the U.S.as of two years ago, according to one estimate.
Shares and bonds of Takata - whose products are used by carmakers including Honda Motor Co. and Ford Motor Co. - have slumped as investors anticipated an imminent bankruptcy filing by the manufacturer.
The former world number two of gonglable cushions has signed an agreement to transfer its activities to Key Safety Systems (KSS), an American equipment manufacturer controlled by Chinese Ningbo Joyson Electronic, for the amount of 175 billion yen (2 billion Canadian dollars).
Dorado's auto was found to have a defective Takata air bag that had been taken from another vehicle. In 2013, the company issued a recall for vehicles equipped with airbags that used ammonium nitrate in the inflation process.
The Takata bankruptcy has the company seeking Chapter 11 protection. After the procedure of bankruptcy, which will end approximately in the first quarter of 2018, the company's structural units in charge of safety belts and child auto seats will be sold for 1.59 billion dollars to an American company Key Safety Systems (KSS).
In the USA alone, about 43 million air bag inflators are now subject to recall, and only about 38 percent have been repaired as of May 26, according to data on the NHTSA's website.
Takata's lethally defective air bags proved to be the company's undoing Monday.
The bankruptcy case also will not affect the $125 million victim compensation fund Takata established as part of its criminal settlement with the U.S. Justice Department.
Seventeen different carmakers, including Honda, Toyota and BMW were listed as unsecured creditors with unknown claims related to recalls and indemnification, according to the filing.
Takata has already agreed to pay a billion-dollar fine to settle with U.S. safety regulators over its airbags. "We hope the day will come when the word "Takata" becomes synonymous with 'safety,"' the website says. And it has promised the USA government that it would pay $US125 million in compensation to victims. Honda, a major Takata customer, first sounded the alarm in 2008 that there might be a problem.
That worries Angela Dickie, 47, of Charleston, South Carolina, who owns a 2012 Volkswagen Passat with a Takata air bag.