The company has got itself a sponsor from U.S.-based Key Safety Systems which is owned by China’s Ningbo Joyson Electronic Corp.
Japanese airbag manufacturer, Takata Corp which found itself in the centre of one of the auto industry’s biggest ever product recall, has filed for bankruptcy in Japan as well as in the United States and has got itself a sponsor in the U.S. in the form of a $1.6 buyout from Key Safety Systems.
Takata Corp is staring at tens of billions in liabilities and costs resulting from nearly a decade of lawsuits and recalls.
The company’s airbags have been linked to nearly 17 deaths around the world.
On Sunday, Takata’s U.S. operator, TK Holdings, filed for Chapter 11 bankruptcy in Delaware with liabilities of $10 billion to $50 billion. The Japanese parent also filed for bankruptcy protection with the Tokyo District Court, early on Monday.
As per Tokyo Shoko Research’s estimate, a market research firm, Takata’s total liabilities stand at $15 billion (1.7 trillion yen).
As per a lawyer from Takata, the total of liabilities will only become clear on the outcome of discussions with carmakers, who incidentally have borne the bulk of the replacement costs.
The bankruptcy filings have now opened the doors of acquisition by Key Safety Systems (KSS), a Michigan-based car parts supplier owned by China’s Ningbo Joyson Electronic Corp.
In a deal that took sixteen long months to hammer out, KSS has agreed to take over Takata’s viable operations, while its operations will be re-organised so that they can continue to churn out millions of replacement airbag inflators, said the two firms.
The China-owned U.S. company will keep “substantially all” of Takata’s 60,000 workforce across 23 countries and maintain its factories in Japan.
The agreement allows Takata to continue with its operations with a minimal disruptions to its supply chain.
“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,” said Shigehisa Takada, Takata’s CEO in a statement.
He went on to add, he along with the top management would resign “when the timing of the restructuring is set.”
The Takada family, which has 84% control of the company, would then cease to be shareholders.
As per Jason Luo, president and CEO of KSS, the “underlying strength” of Takata’s business had not diminished despite the airbag recall.
Both companies expect to seal the definitive agreements for the sale in coming weeks and finialise the twin bankruptcy processes in the first quarter of 2018.
Incidentally though, the twin filings have not resolved all issues.
Its biggest customer, Honda Motor Co stated it has yet to reach a final agreement with Takata on responsibilities for the recall. The company stated it would continue to talk with the supplier but anticipated that recovering the bulk of the claims is going to be an uphill climb.
The Tokyo Stock Exchange stated Takata’s shares would be delisted on July 27.