Takata files for bankruptcy, to be bought by US-based firm

Japan-based airbag manufacturer Takata has filed for bankruptcy protection in the US and Japan. This is being seen as a consequence of the company's accumulating losses as it faces billions of dollars in costs and liabilities due to its defective airbags. Takata has officially revealed that it will be sold to US-based Key Safety Systems, in a deal worth US$ 1.6 billion.

The company's US-based arm, TK Holdings had filed for Chapter 11 bankruptcy in Delaware, while the Japanese parent company has also filed for similar protection with the Tokyo District Court. It is being speculated that the company will in total have a liability estimate of around US$ 15 billion. However, the final figure will be available only when various carmakers, who used Takata airbags, have a discussion and reach a liability figure with the airbag supplier. Currently, these carmakers have borne the major brunt of the recall and replacement costs.

Key Safety Systems will buy all Takata assets, apart from those that are related to airbags. The US-based firm believes that Takata's other products, like steering wheels and seat belts, still have satisfactory brand image and market demand. The company has claimed that it is likely to keep "substantially all" Takata employees, which amount to a 60,000 workforce that is spread over 23 countries.

Takata has been at the centre of the biggest automotive recall ever seen, after its airbags were found to have a potential defect that makes them volatile with age and prolonged exposure to heat. This can result in sudden explosion of the airbag inflator with higher force, which could cause metal shards to be thrown around the cabin, leading to the risk of an injury to the driver and occupants. The said issue has been linked to at least 17 deaths across the globe.

Source: Reuters