Japan’s crisis-hit car parts manufacturer Takata said it filed for bankruptcy protection in Japan and the US on Monday, after deadly faults in its airbags triggered the auto industry’s biggest ever safety recall.
The 84-year-old Tokyo-based car parts giant is facing lawsuits and huge costs over an airbag defect linked to at least 16 deaths globally.
News reports have said its liabilities would exceed one trillion yen ($9bn).
American auto parts manufacturer Key Safety Systems, owned by China’s Ningbo Joyson Electronic, will take over Takata, both companies said.
Takata will sell its assets and businesses to Key Safety Systems for an estimated $1.588bn, they said.
Trading in Takata shares was suspended at the opening of the stock market Monday after a week of massive volatility and the Tokyo Stock 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.
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.
Nearly 100 million cars, including about 70 million in the US, were subject to the airbag recall linked to a risk they could improperly inflate and rupture, potentially firing deadly shrapnel at the occupants.
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.
In the US, Takata agreed in January to plead guilty to wire fraud for falsifying testing data and reports provided to carmakers.
The penalty includes a $25m criminal fine, a $125m compensation fund for victims, and an $850m restitution fund for carmakers.
Three of its executives were indicted in connection with the safety defects.
Al Jazeera’s Wayne Hay, reporting from Tokyo, says filing for bankruptcy offers Takata some protection going forward, and it makes the company’s affairs more ransparent, while allowing for a bailout.
“But there is a long way to go in terms of the recall process – most of the cases have been in the United States [and] only around 38% of the repairs and replacements have been completed in the US,” he said.
“Because there is so much work to be done, there is a real concern that there won’t be enough money to complete all these recalls and therefore the auto manufacturers themselves will have to pick up most of the costs.”