Drowning in a sea of lawsuits and recall costs, Japanese airbag maker Takata Corp. is expected to seek bankruptcy protection in Tokyo and the United States early Monday.
Takata was done in by defective airbag 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. and Canadian history. So far 100 million inflators have been recalled worldwide including 69 million in the U.S., affecting 42 million vehicles.
Rival Key Safety Systems, based in suburban Detroit, will buy most of Takata’s assets for $1.6 billion US and take over its manufacturing operations to make seat belts, airbags 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 per cent of the 69 million recalled inflators in the U.S. 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.
‘Free and clear’ of past or future liabilities
At least $1 billion from the sale will be used to satisfy Takata’s settlement of criminal charges in the U.S. for concealing problems with the inflators. It was unclear what the rest of 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…