Takata to Stop Making Air-Bag Inflators After Recall as Bankruptcy Looms

Takata to Stop Making Air-Bag Inflators After Recall as Bankruptcy Looms

Takata Corp. plans to file for bankruptcy as soon as next week, paving the way for a sale of the 84-year-old Japanese air-bag maker behind the biggest safety recall in automotive history.

The board of Takata's US-based unit TK Holdings is expected to approve a filing for Chapter 11 there this month, the Nikkei said.

The Tokyo Stock Exchange has suspended trading in shares of Takata following the reports of pending bankruptcy. Takata is working towards a deal for financial backing from the US auto parts maker Key Safety Systems Inc., according to sources. The company has until early 2018 to pay $850-million owed to automakers, or within five days of securing a financial backer.

Takata is preparing to file for bankruptcy protection in the USA and Japan as early as next week, according to a person familiar with the matter. There was no official statement from Takata more than two hours after markets closed and a company spokeswoman declined comment.

The supplier's air bag inflators use a propellant that can be rendered unstable after long-term exposure to heat and humidity, leading them to rupture and spray deadly metal shards at vehicle occupants.

Reports said that All top carmakers, even the likes of General Motors and Volkswagen, have been affected.




Toyota's priority at this point is to ensure a steady supply of replacement inflators for its customers, said spokeswoman Sonomi Aikawa in an email. It's cost will reach far beyond Takata, weighing on the financials of almost 20 automakers.

At least 15 people have died in accidents involving faulty Takata air bag inflators in the United States, Malaysia and elsewhere.

"Ultimately the responsibility for the Takata airbag recalls rests with the automakers who must figure out how to replace the flawed airbags", Krebs said.

Takata in January agreed to pay $1 billion to US regulators, consumers and carmakers.

The Japanese component supplier has so far, paid $25 million as fine and $125 million to to a victim compensation fund, which includes vistims from any incidents that might occur in the future.

A USA judge said earlier this year the costs of replacing all of the faulty Takata inflators could be $8 billion. In March, Toshiba Corp.'s US nuclear unit Westinghouse Electric filed for Chapter 11 bankruptcy.

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