Takata plans to file for bankruptcy as early as next week
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Takata Corp, the airbag manufacturer facing more than US$ 9 billion in liabilities following a massive global recall of air bags linked to deadly explosions, is preparing to file for bankruptcy as early as next week. American autoparts maker Key Safety Systems, owned by China's Ningbo Joyson Electronic, will sponsor Takata's turnaround process, sources revealed to Japanese media.
Takata, one of the world's biggest automotive suppliers, has been working for months to complete a deal with Key Safety.
A new company created under Key Safety is to purchase Takata operations for about US$ 1.62 billion and continue supplying air bags, seat belts and other products. The shrunken Takata will remain responsible for recall-related liabilities.
Also at stake is US$ 850 million owed by Takata to major global automakers under a settlement agreed to earlier this year stemming from the automotive industry's largest ever safety recall.
Sources familiar with the matter, who asked for anonymity because they were not authorized to speak with the media, said a final deal with Key may not be reached before Takata files for bankruptcy. The company plans to begin proceedings in both the United States and Japan, the sources said.
As of October 2016, Takata air bags had killed 11 people in the U.S. alone. The deaths have been blamed on rupturing inflators. Some 100 million units have been recalled worldwide, but automakers have shouldered most of the burden for now, since Takata claims it cannot determine where the fault for the defect lies and is unable to make "a reasonable estimate of the costs likely to be borne by the group."
Major global car manufacturers have expressed concern about the company filing for bankruptcy without a deal in place because of disruption it could cause to the production of replacement air bag inflators. More than 65% of 46.2 million recalled Takata air bag inflators in the United States have not been repaired.
A U.S. judge said earlier this year the costs of replacing all of the faulty Takata inflators could be US$ 8 billion.
Takata inflators can explode with excessive force, unleashing metal shrapnel inside cars and trucks.
In Mexico, Takata owns six plants located in the cities of Monclova, Torreon, Acuna, Agua Prieta and two facilities in Monterrey, where it also operates a Technical Center.