After weeks of speculation, Japanese airbag maker Takata Corp. has filed for bankruptcy protection in Japan and the U.S. Frankly, the odds were definite favoring bankruptcy because of the weight of the world’s biggest automotive recall. Takata said it would sell key assets to U.S. supplier Key Safety Systems. Key Safety, based in Sterling Heights, Mich., confirmed that it would buy “substantially all” of Takata’s global assets and operations for $1.59 billion. The sale will not include some operations related to Takata’s scandal-plagued business in ammonium nitrate airbag inflators subject to the global recall that brought the company to the brink of collapse. The inflators were prone to exploding with too much force and spraying vehicle cabin’s with metal shards. At least 16 deaths and 180 injuries worldwide were linked to the airbags.
In February, Takata pleaded guilty to wire fraud charges in the U.S. for systematically withholding information about the defects and manipulating inflator test data. In January, a federal grand jury indicted three former Takata executives for criminal wrongdoing in connection with the safety defect. A month later, Takata agreed to a $1 billion criminal penalty. Key Safety said the ammonium nitrate airbag inflator operations would be run by a reorganized Takata following the closing of the transaction — and they would eventually wind down. Takata said it would keep producing the components through March 2020 to ensure a steady supply of replacement inflators for the millions being recalled.
Because the bankruptcy news came just as this issue was being sent to the printer, we will hold further discussion of this development and its overall effect for the August issue. I will say that no informed persons were really surprised that Takata filed for bankruptcy. However, it’s critically important that Takata’s victims be protected as this matter evolves.
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