Bankrupt Air-Bag Maker Takata Means to Keep Limping Along

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The company plans to sell what's rest of its operations to the rival USA auto parts supplier, Key Safety Systems, for $1.588 billion. Its airbag inflators have been linked to at least 16 deaths and 180 injuries around the world because they can rupture and send metal fragments flying.

Takata will use part of the sale proceeds to reimburse the automakers, but experts say the companies still must fund a significant portion of the recalls themselves.

In February, Takata pleaded guilty for falsifying testing data and reports provided to automakers.

Around 100 million airbags, including about 70 million in the United States, are subject to the massive recall. The scope of the recalls means some vehicle owners face lengthy waits for replacement parts, meanwhile driving cars with air bags that could malfunction in a crash.

Takata will ask the U.S. Bankruptcy Court in DE to appoint a representative for people who will be injured in the future from Takata inflators.

The chemical is at the heart of the recall crisis, degrading over time under conditions of heat and humidity and resulting in uncontrolled explosions that ruptured airbag parts.

Takata said Monday it's seeking bankruptcy protection both in Japan, where it's based, and in the U.S. Of that amount, $850 million goes to automakers to help cover their costs from the recalls.

Takata, the firm at the centre of the auto industry's biggest ever product recall, said proceeds from the sale would be used to settle a plea agreement with the U.S Department of Justice. "One gentleman cannot smile anymore".

2013: Toyota, Honda, Nissan, Mazda and General Motors recall almost 3.4 million older-model vehicles worldwide due to defective Takata air bags. But the safety devices relied on a faulty inflator that when activated can explode and send shrapnel into the vehicle. He said he expects to sign a formal agreement with Takata in the next few weeks.

After Takata's bankruptcy filing, its shares will be delisted from the Tokyo Stock Exchange on July 27.

Key, a Chinese company with worldwide operations, makes inflators, seat belts and crash sensors for the auto industry. The U.S. -based company is owned by Ningbo Joyson Electronic Corp. of China. Its global headquarters and US technical center is in Sterling Heights, Michigan.

"Takata has deep management talent, a dedicated work force and a long history of exceptional customer service", said Jason Luo, president of Key Safety Systems.

The Takata corporate name may not live on after the bankruptcy.

Hungarian daily Magyar Nemzet reports that cars containing the defective airbags had also ended up on Hungarian roads, as a result of which more than 15,000 Toyotas had to be recalled to the factory. United States auto safety regulators announced a record 200 million Dollars civil fine against Takata on November 4 for providing inadequate and inaccurate information about its dangerously explosive airbags installed in millions of cars.

"KSS is the ideal sponsor as we address the costs related to airbag inflator recalls, and an optimal partner to the company's customers, suppliers and employees".

Peter Prieto, Court-appointed Chair Lead Counsel for the consumer plaintiffs in the Takata Airbag Product Liability Litigation, released a statement concerning the recent bankruptcy filing by Takata Corp.

"Takata agreed to pay $1 billion over air bag fraud; three of the company's executives were also criminally charged". It's not clear yet where the rest of the $1.6 billion will go.

It was found that the airbag inflators could explode if the vehicle were to get into a collision, and it would spray metal fragments towards drivers as well as passengers. Eventually, it grew into one of the world's largest seat belt and air bag suppliers.

"They have provisioned already for the losses related to the recalls", Lewis added.

Nissan Motor Co., Japan's No.2 automaker, issued a statement saying it would also have trouble claiming reimbursement for its recall costs.

Cars and trucks made by 19 companies are included in the recall. Many owners have been put on waiting lists by their dealers until the parts arrive.

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