Takata, firm that plead guilty for exploding airbag scandal, files for bankruptcy

Posted June 30, 2017

With 17 deaths linked to its airbags adding to costs and lawsuits, Tokyo Shoko Research estimates Takata's total liabilities stand at ¥1.7T ($15B).

In September a year ago, BMW recalled 110,000 cars in Japan, while Honda, Japan's second-biggest carmaker, recalled 668,000 vehicles for the same issue, bringing the tally of cars it has had to bring back to its dealership to 51 million.

In fact, the last batch of USA repairs is not scheduled to begin until September 2020, according to the National Highway Traffic Safety Administration, which is overseeing the recall.

Despite its parent declaring bankruptcy in Japan and the United States, automotive firm Takata has promised to continue its capacity expansion in Hungary as planned, according to Hungarian news agency MTI. Key Safety Systems is based in MI but is owned by a company in China, Ningbo Joyson Electronic.

The $1.6bn (£1.3bn) deal was announced after the Japanese company filed for chapter 11 bankruptcy protection in the U.S., with similar action taken in Japan.

With liabilities expected to exceed 1 trillion yen ($9 billion), Takata's bankruptcy would be the largest ever by a Japanese manufacturer.

Under the deal, Sterling Heights based-Key Safety proposed to acquire all global Takata assets and operations, except those tied to the phase-stabilized ammonium nitrate airbag inflators business.

The company has admitted that its employees knew about the potential problems with its air bag inflators as early as 2000. According to the company, they would be acquired by the US-based company Key Safety Systems for a couple of billion dollars.

In February, Takata Chief Financial Officer Yoichiro Nomura appeared in federal court in Detroit on behalf of the corporation to plead guilty to wire fraud and to express the company's "deep regret". Malfunction of Takata's airbag inflators led to at least 16 deaths and a $1 billion fine in the U.S.

Those airbag inflators were at the heart of the largest automotive safety recall in history that could involve up to 100 million inflators worldwide, more or less.

Takata's biggest customer, Honda, first started recalling Accord and Civic models in 2008 to replace the supplier's air bags.

"We're in a very hard situation, and we had to find ways to keep supplying our products", CEO Takada told the AP.

The U.S. Justice Department has also charged Takata executives Shinichi Tanaka, Hideo Nakajima and Tsuneo Chikaraishi with one count of conspiracy to commit wire fraud and five counts of wire fraud in an indictment was unsealed on January 13.

Preliminary approval was granted on June 12 to class action settlement agreements that resolve economic loss claims against automakers such as BMW, Mazda, Subaru, and Toyota. And in 1990, Takata produced its first air bag.