Japan's Takata Corp 7312.T, the firm at the centre of the auto industry's biggest ever product recall, filed for bankruptcy protection in the United States and Japan and said it would seek $1.6 billion in aid from U.S.-based Key Safety Systems (KSS).
In one of Japan's biggest bankruptcies, Takata is facing tens of billions of dollars in costs and liabilities resulting from almost a decade of recalls and lawsuits. Its airbags have been linked to at least 17 deaths and more than 180 injuries.
Its U.S. arm filed Chapter 11 bankruptcy in Delaware on Sunday with liabilities of $10 billion to $50 billion, while the Japanese parent filed for protection with the Tokyo District Court early on Monday.
The Tokyo Stock Exchange said its shares would be delisted on July 27.
The filings opened the door to the financial rescue from auto parts supplier KSS, which Takata tapped as its preferred sponsor to help it keep churning out millions of replacement airbag inflators. Proceeds from the sale will be used to settle a plea agreement with the U.S Department of Justice.
The filings have, however, not resolved all issues. Honda Motor Co 7267.T, Takata's biggest customer, said it had reached no final agreement with Takata on responsibilities for the recall. Honda said it will continue talks with the supplier but anticipates difficulties in recovering the bulk of its claims.
Takata, an 84-year-old company, faces billions in lawsuits and recall-related costs to its clients, including Honda, BMW BMWG.DE, Toyota Motor Corp 7203.T and others which have been paying recall costs to date.
Takata said its agreement with KSS would mean the company could continue to operate without interruptions to its operations.
"We believe taking these actions in Japan and the U.S. is the best way to address the ongoing costs and liabilities of the airbag inflator issues with certainty and in an organised manner," Takata CEO Shigehisa Takada said in a statement.
Jason Luo, president and CEO of KSS, said in a statement the "underlying strength" of Takata's business had not diminished despite the airbag recall, citing its skilled employee base, geographic reach and other safety products such as seat belts. As part of the bankruptcy protection plans, KSS would acquire all of Takata's assets barring certain assets and operations related to the airbag inflators involved in the global recall in the planned deal, the two companies said.
Takata will keep operations of its affected inflators for now to continue supplying recall replacement parts, and will eventually wind down those operations.
UNPRECEDENTED RECALLS
Global transport authorities have ordered about 100 million inflators to be recalled. Industry sources have said that recall costs could climb to about $10 billion.
The ammonium nitrate compound used in the airbags was found to become volatile with age and prolonged exposure to heat, causing the devices to explode.
Costs so far have pushed the company into the red for the past three years, and it has been forced to sell subsidiaries to pay fines and other liabilities.
Industry sources say Takata would be able to complete the current global recall under bankruptcy, but could face problems if further recalls are required down the line. It has sought help from rival suppliers including Sweden's Autoliv Inc ALV.N to produce replacement inflators.
It also faces potential liabilities stemming from class action lawsuits in the United States, Canada and other countries.
Earlier this year, Takata pleaded guilty to a criminal charge of falsifying data on its inflator defects, agreeing to pay a $1 billion fine.
Founded as a textiles company in 1933, Takata began producing airbags in 1987 and at its peak became the world's No. 2 producer of the safety products. It also produces one-third of all seatbelts used in vehicles sold globally, along with childseats, steering wheel systems and other components.
CEO and Chairman Shigehisa Takada, the bookish grandson of the company's founder, has been criticised for his handling of the recall crisis. He has promised to resign after a new management team takes over.
Reuters
Mon Jun 26 2017
Takata Corp. Chairman and CEO Shigehisa Takada (L) and senior management bow as they attend a news conference after its decision to file for bankruptcy protection in Tokyo, Japan, June 26, 2017. REUTERS/Toru Hanai
Sultan Nazrin, Tuanku Zara hadiri majlis Aidilfitri PDRM Perak
Sultan dan Raja Permaisuri Perak berkenan berangkat menghadiri Majlis Sambutan Aidilfitri PDRM Kontinjen Perak 2024.
Nahas helikopter Lumut: Kebajikan, pendidikan anak-anak wira dipastikan tidak terabai - Menteri
Kementerian Pendidikan lakukan susur tindak bagi memastikan kebajikan 10 orang anak mangsa nahas helikopter dijaga sehingga tamat persekolahan kelak.
Bintang TikTok Iraq, Umm Fahad ditembak mati di luar rumah
Pihak berkuasa Iraq umum penubuhan "jawatankuasa siasatan khas- untuk menjejaki pembunuh yang tidak dikenali itu.
PM Anwar tiba di Riyadh untuk hadiri Mesyuarat Khas Forum Ekonomi Sedunia
Perdana Menteri Anwar tiba di Riyadh dalam rangka lawatan tiga hari bagi menghadiri Mesyuarat Khas Forum Ekonomi Sedunia (WEF).
Jemputan peribadi ke Mesyuarat Khas WEF bukti keakraban Putera Mahkota Mohammed, PM
Ini merupakan lawatan keempat Anwar ke Arab Saudi sejak dilantik sebagai Perdana Menteri.
Kerajaan Pusat peruntuk RM1.59 bilion untuk pembangunan fizikal di Terengganu
Peruntukan tersebut melibatkan 99 projek baharu dan 296 projek sambungan di bawah Rolling Plan 4 (RP4) Rancangan Malaysia ke-12 (RMK12).
Pahang rancang wujudkan zon perindustrian di setiap daerah
Kerajaan Pahang rancang wujudkan zon perindustrian di kesemua 11 daerah di negeri ini bagi menggalakkan kemasukan lebih banyak pelaburan asing khususnya dari China.
Kertas kabinet wujud sektor sukan dibentang dalam tempoh sebulan - Hannah
Hannah berkata dengan data yang lebih menyeluruh melibatkan sektor industri sukan nanti, pihaknya akan mampu merangsang pertumbuhan sukan di negara ini dengan lebih baik.
Tiga Syarikat Semikonduktor umum melabur di Pulau Pinang - Kon Yeow
Tiga syarikat semikonduktor dari China menyatakan komitmen untuk membuat pelaburan baharu di Pulau Pinang.
Pindaan garis panduan lawatan: Sekolah diharap susun semula program - Fadhlina
Semua sekolah diharap dapat menyusun semula program lawatan masing-masing berikutan pindaan Garis Panduan Lawatan Murid Sekolah pada tahun lepas bagi mengukuhkan pembelajaran di luar kelas, kata Menteri Pendidikan, Fadhlina Sidek.
Syarikat di India muflis, 10 bilion dolar AS tertunggak
Ia merupakan antara kes muflis syarikat swasta terbesar dalam sejarah India.