Japan’s Takata files for bankruptcy protection

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TOKYO: Japan’s crisis-hit car parts maker Takata said it filed for bankruptcy protection on Monday, after deadly faults in its airbags triggered the auto industry’s biggest ever safety recall.

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The Tokyo-based car parts giant is facing lawsuits and huge costs over the defect linked to at least 16 deaths and scores of injuries globally.

The scandal has involved almost every major global automaker, including top client Honda, which has already written down significant costs linked to the crisis.

News reports have said Takata’s liabilities would exceed one trillion yen ($9 billion). Immediate confirmation was not available.

American auto parts maker Key Safety Systems (KSS), owned by China’s Ningbo Joyson Electronic, will take over Takata for an estimated $1.58 billion, both companies said.

Trading in Takata shares was suspended at the opening of the stock market Monday after a week of massive volatility and the Tokyo exchange said it would delist Takata on July 27.

“At a board meeting on June 26, our company decided to begin procedures in filing for bankruptcy protection,” Takata said in a statement after making the filing with the Tokyo District Court. It said the court had accepted the measure.

Takata has 12 overseas subsidiaries that have also filed for bankruptcy protection.

Little-known outside Japan, Takata was founded in 1933 as a textile company that evolved into an automotive parts giant selling airbags in the eighties.

It has dozens of plants and offices in 20 countries, including the US, China and Mexico. The airbag division has accounted for over one-third of total revenue in previous years, with seatbelts and steering wheels among its other key products.

Takata chairman Shigehisa Takada is holding a press briefing in Tokyo Monday morning.

‘Underlying strength’

Jason Luo, president and chief executive of KSS, voiced confidence in Takata’s rehabilitation.

“Although Takata has been impacted by the global airbag recall, the underlying strength of its skilled employee base, geographic reach, and exceptional steering wheels, seat belts and other safety products have not diminished,” he said in a statement.

“We look forward to finalising definitive agreements with Takata in the coming weeks, completing the transaction and serving both our new and long-standing customers while investing in the next phase of growth for the new KSS.”

Takata shares soared more than 40 percent on Friday after collapsing over the week as traders made bets on its likely bankruptcy.

Analysts attributed the upsurge on Friday to speculative trading among short-term investors hoping to profit from wild swings in share prices as well as to position adjustments ahead of the weekend.

Millions of airbags produced for some of the largest automakers, including Toyota and General Motors, are being recalled because of the risk that they could improperly inflate and rupture, potentially firing deadly shrapnel at the occupants.

Nearly 100 million cars, including about 70 million in the United States, were subject to the recall.

The ultimate cause of the malfunctions has not yet been identified but three factors are suspected: a chemical component, ammonium nitrate, that responds poorly to humidity; extreme climatic conditions, such as heat and high humidity; and faulty design.

Takata has already agreed to pay a billion-dollar fine to settle with US safety regulators over its airbags, and the company was heavily criticised for staying largely silent as the crisis grew.

Takata’s major automaker clients reportedly support the bankruptcy filing plan.

The scandal-hit firm and some of its car customers are facing legal claims they knew about the problem and kept silent about it.

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