Executive Briefings

Roiled by Airbag-Recall Crisis, Takata Files for Bankruptcy

Takata Corp. filed for bankruptcy protection in the biggest postwar Japanese corporate failure in the manufacturing industry, as the 84-year-old company buckled under liabilities from millions of recalled air bags and agreed to be sold to a Chinese-backed investor.

The Tokyo-based company and its units filed for creditor protection in the U.S. and Japan. The Chapter 11 bankruptcy in Delaware listed more than $10bn in liabilities, including claims from automakers including Honda Motor Co. - the biggest user of the airbags - and Toyota Motor Corp. as well as individuals who have brought class-action lawsuits.

The filing is the culmination of a saga that began with a recall more than eight years ago but has spiraled as the company’s malfunctioning airbag inflators — which sent shards of metal at drivers and passengers — have been blamed for at least 17 deaths worldwide. It also removes the final hurdle for the supplier to be acquired by Key Safety Systems Inc., a unit of Ningbo Joyson Electronic Corp. founded by Wang Jianfeng, for 175bn yen ($1.6bn).

“We were facing a severe situation and we weren’t able to wait any longer,” Takata Chairman and Chief Executive Officer Shigehisa Takada told a briefing in Tokyo Monday. The 51-year-old will step down after handing over the company to its new management.

The sale to Key Safety and the bankruptcy proceedings are expected to be completed by the first quarter of next year, Takata said in a statement. Key Safety will substantially retain all of Takata’s employees worldwide. The air-bag maker had 50,530 people as of March 2016, according to data compiled by Bloomberg.

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The Tokyo-based company and its units filed for creditor protection in the U.S. and Japan. The Chapter 11 bankruptcy in Delaware listed more than $10bn in liabilities, including claims from automakers including Honda Motor Co. - the biggest user of the airbags - and Toyota Motor Corp. as well as individuals who have brought class-action lawsuits.

The filing is the culmination of a saga that began with a recall more than eight years ago but has spiraled as the company’s malfunctioning airbag inflators — which sent shards of metal at drivers and passengers — have been blamed for at least 17 deaths worldwide. It also removes the final hurdle for the supplier to be acquired by Key Safety Systems Inc., a unit of Ningbo Joyson Electronic Corp. founded by Wang Jianfeng, for 175bn yen ($1.6bn).

“We were facing a severe situation and we weren’t able to wait any longer,” Takata Chairman and Chief Executive Officer Shigehisa Takada told a briefing in Tokyo Monday. The 51-year-old will step down after handing over the company to its new management.

The sale to Key Safety and the bankruptcy proceedings are expected to be completed by the first quarter of next year, Takata said in a statement. Key Safety will substantially retain all of Takata’s employees worldwide. The air-bag maker had 50,530 people as of March 2016, according to data compiled by Bloomberg.

Read Full Article