Airbag-maker Takata files for bankruptcy in Japan, US

Airbag-maker Takata files for bankruptcy in Japan, US

Japan's crisis-hit vehicle parts maker Takata said Monday it has filed for bankruptcy protection and its chief executive would quit, after a deadly airbag defect triggered the auto industry's biggest ever safety recall.

The filings would open the door to a financial rescue from US -based auto parts supplier Key Safety Systems, which Takata has tapped as its preferred financial sponsor as it must keep churning out millions of replacement air-bag inflators.

The firm's executives sought to reassure customers, suppliers and shareholders in a news conference on Monday, saying: "As a group our company will continue to count on your understanding and co-operation as we endeavour to provide a stable supply of products".

The move is part of a restructuring scheme to restore its business, battered by a global recall of its defective air bag inflators. Malfunction of Takata's airbag inflators led to at least 16 deaths and a $1 billion fine in the U.S.

The company faces massive costs from a global recall of its faulty air bag inflators that have been linked to at least 11 deaths in the United States.

It appears that the deal will see Takata, essentially, broken into two: a division that Key Safety will own, involving the "non-toxic" assets, and the airbag arm. As a result, automakers will be forced to deal with much of the financial burden for the recalls.

"NHTSA is doing everything possible to make sure that there are no more preventable injuries or deaths because of these unsafe airbag inflators", said then-NHTSA Administrator Dr. Mark Rosekind.

More than 100m cars with Takata airbags, including around 70m vehicles in the U.S., have been recalled since concerns started being flagged back in 2007. The scope of the recalls means some auto owners face lengthy waits for replacement parts, meanwhile driving cars with air bags that could malfunction in a crash.

As of May 26, only 38 percent of the air bag inflators under recall in the U.S. had been repaired, according to data on the U.S. Department of Transportation's National Highway Traffic Safety Administration website.

The new sponsor will not be liable for these inflators, which use ammonium nitrate, the volatile chemical compound at the root of the defective airbags.

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"We believe taking these actions in Japan and the U.S.is the best way to address the ongoing costs and liabilities of the airbag inflator issues with certainty and in an organised manner,"Takata CEO Shigehisa Takada said in a statement".

The process could take years.

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

That settlement will speed the removal of faulty inflators from 15.8 million vehicles and compensate consumers for economic losses, Prieto said.

Another $125 million will go to victims and Takata will pay a $25 million fine to the USA government.

2009: Ashley Parham, 18, dies when the Takata air bag in her 2001 Honda Accord explodes after her auto bumps into another vehicle in a parking lot. Its global headquarters and USA technical center is in Sterling Heights, Michigan.

One of the people briefed on the filings said Key would get Takata's assets "free and clear" of past or future liabilities. "We hope the day will come when the word "Takata" becomes synonymous with 'safety, '" the website says.

The Japanese company had been struggling to fund the recall of more than 100 milion airbags that contain ammonim nitrate inflators, which can explode and hurl tiny bits of shrapnel-like metal into the passenger compartment.

Parts are not yet available for some models, and other models haven't been recalled yet.

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