Takata, Unable to Overcome Airbag Crisis, Files for Bankruptcy Protection

Takata, Unable to Overcome Airbag Crisis, Files for Bankruptcy Protection

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Shigehisa Takada, the company’s chief executive, said a court-supervised restructuring was the best way to ensure that Takata could keep supplying automakers.

The Airbag in Your Car Could Explode. This Is What You Should Do About It.

Defective airbags made by Takata have been tied to 11 deaths and more than 180 injuries in the United States alone. The ensuing recall — the largest in automotive history — has turned out to be messy, confusing and frustrating for car owners.


“We needed to consider the impact on the global car industry, not just in Japan but also in the United States and Europe,” Mr. Takada said.

A new corporate entity established by Key Safety Systems will take over Takata’s production operations, which encompass seatbelts and other equipment as well as airbags. Despite its troubles, Takata has held on to about 20 percent of the global airbag market, which is dominated by just a handful of companies.

Takata will continue to exist on paper, at least for a while. But instead of making airbags, its work will be to pay off debts.

Takata owes billions of dollars to banks and automakers, which have been paying to replace tens of millions of potentially dangerous Takata airbag inflaters. And it has promised the United States government that it will pay $125 million in compensation to victims. Lawsuits could add to the burden.

Takata agreed in January to plead guilty in the United States to wire fraud for providing false data to safety regulators. The recalled Takata airbag inflaters can explode with too much force in a collision, sending shrapnel flying through a vehicle’s cabin.

Takata’s bankruptcy is thought to be the largest ever by a Japanese manufacturing company. The cost of the recalls continues to mount, and Takata said it could not yet estimate the scale of the liabilities it would ultimately face. But the figure is expected to be over 1 trillion yen, or about $10 billion.

Takata’s Downfall

Takata, a Japanese equipment manufacturer that has struggled since a scandal erupted nearly a decade ago over airbag ruptures tied to at least 14 deaths, said it would file for bankruptcy.

Bankruptcy will leave at least some of Takata’s creditors out in the cold. Even after selling its assets, the company will not have enough money to pay everyone it owes.

Among the biggest unsecured creditors of Takata’s American operation, according to a court filing, are virtually all of the major automakers, led by Honda, Toyota and Fiat Chrysler.

Once the last of Takata’s obligations are settled, the company will shut down.

Takata initially said it hoped to find a buyer for all or part of its business last year. But the question of who would be stuck with its liabilities has been a stumbling block in the complex negotiations over its fate.

The controlling Takada family initially appeared to be holding out hope that it could find a white knight investor to save the company — perhaps by buying a minority stake — leaving Takata intact and out of bankruptcy. But no buyer wanted to share responsibility for the still unknown final cost of resolving the recalls and their aftermath.

The sale to an American-Chinese buyer is notable in Japan. Japanese politicians and government officials have often cajoled domestic businesses to save competitors rather than let them fail or be swooped up by foreigners.

The Japanese news media had speculated that a “Rising Sun alliance” of Japanese carmakers — led by Honda, Takata’s largest customer — might bail out Takata. But carmakers pushed back against the idea, fearing ballooning liabilities and anger from their shareholders.

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