Airbag manufacturer Takata is at the center of one the largest automotive recalls which affect an estimated 100 million vehicles from two dozen automakers around the world. The airbags in question have inflators that can rupture and send shrapnel flying in the event of a crash. They have been linked to at least 16 deaths and 180 injuries. Now, the next chapter begins as Takata filed for bankruptcy.
Yesterday, TK Holdings (Takata's U.S. operations) filed for Chapter 11 bankruptcy in Delaware on Sunday with liabilities totaling between $10 billion to $50 billion. The company would file for bankruptcy in Japan today.
Takata also announced that it would be selling its key assets to Key Safety Systems, a Michigan-based supplier owned by China's Ningbo Joyson Electronic Corp. The purchase will cost Key $1.6 billion.
At a press conference today in Tokyo, CEO Shigehisa Takada said the company had no choice to sell their assets due to liabilities increasing and finances collapsing.
"We spent much time on negotiations, it was extremely difficult to reach an agreement with more than 10 carmakers worldwide and a sponsor candidate company," said Takada.
"If things are left as is, we are aware of risks that we may not able to raise fund and to continue stable supply of products. In light of the management environment we face, the state of negotiations with the sponsor candidate and carmakers, and the external expert committee's opinion, we have decided today to file for bankruptcy protection."
Takata attorney Nobuaki Kobayashi said the total amount of liabilities was still unknown and the company is in talks with automakers to figure out the worldwide cost. According to Automotive News, analysts put potential liabilities as high as $10 billion for ongoing recalls, penalties and settlements. A report from Tokyo Shoko Research Ltd., puts Takata total liabilities at 1.7 trillion yen (about $15 billion).
Back in February, Takata pleaded guilty to wire fraud charges in the U.S. for withholding key information about the defects and manipulating test data.