Takata, a Japanese global supplier of automotive safety systems such as seat belts, airbags and child seats, has filed for bankruptcy protection in Japan and the US, amid lawsuits and mounting costs of massive recalls – about 70 million in the US alone, to date – overits defective inflators that are linked to 16 fatal injuries worldwide. Takata’s 12 overseas subsidiaries are also reported to have also filed for bankruptcy protection.
As early as mid-2000s, it was reported that Takata’s airbags had already been subjected to recalls. In 2008, Honda announced its recall of some 4,000 Accords and Civics 2001 models for faulty Takata airbags. Honda has since continued pulling out some of its affected vehicles; meanwhile, other car makers such as Toyota, Nissan, Mazda and BMW, have followed suit.
In 2015, US safety regulators imposed a daily US$14,000 fine on Takata for failing to cooperate with the US Department of Transportation’s probe on the airbag glitch.
In January this year, Takata also pleaded guilty to wire fraud offence, and this, caused them a total of US$1 billion in fines and damages.
The Independent Testing Coalition (ITC), a team of 10 automakers composed of Toyota, Honda, Fiat Chrysler, BMW, Ford, General Motors, Mazda, Mitsubishi, Nissan and Subaru, engaging the testing expertise of US aerospace and defence industry company, Orbital ATK, found three factors, which made Takata’s airbags prone to ruptures:“the ammonium nitrate propellant, the construction of Takata’s inflator assembly and the exposure to heat and humidity’.
Meanwhile,Chinese-owned safety equipment supplier Key Safety Systems (KSS), has agreed in principle to sponsor a restructuring plan for the purchase of substantially all of Takata’s global assets and operations for US$1.58 billion (approximately ¥175 billion), subject to certain adjustments at closing.
Under the agreement, the US-based KSS will acquire all of Takata’s assets, except for certain assets and operations that relate to Takata’s manufacturing and sale of phase-stabilised ammonium nitrate (PSAN) airbag inflators. It is expected that Takata’s PSAN-related operations will be run by reorganised Takata following the transaction closing.
The proposed structure for the potential transaction is intended to minimise transaction risk and supply chain disruption concerns for Takata’s OEM customers, according to KSS.
Headquartered in Tokyo, Takata operates 56 plants in 20 countries with approximately 46,000 global employees worldwide.