Under the agreement with Key, Takata's manufacturing of inflators will be kept separate in order to keep manufacturing inflators used as replacement parts in recalls.
Japanese air bag maker Takata Corporation says it had to file for bankruptcy protection in Tokyo and the U.S.to ensure it could continue supplying replacements for faulty air bag inflators linked to the deaths of at least 16 people.
More than 100 million cars with Takata airbags, including around 70 million vehicles in the United States, have been recalled since concerns first emerged in 2007. That includes 69 million in the USA, affecting 42 million vehicles.
However, operations linked to the defective airbags will not become part of the combined company, which "will be run by reorganised Takata. and eventually will be wound down".
Takata faces billions in lawsuits and recall-related costs to its clients, including Honda, BMW, Toyota Motor Corp and others, which have been paying recall costs to date.It also faces potential liabilities stemming from classaction lawsuits in the United States, Canada and othercountries.Industry sources have said that recall costs could climb to about $10 billion.
News reports have said Takata's liabilities would exceed one trillion yen ($9 billion).
TK Holdings, its USA operations, filed Chapter 11 bankruptcy in DE on Sunday with liabilities of $10-billion to $50-billion, while the Japanese parent filed for protection with the Tokyo District Court early on Monday.
Under the agreement with Key, remnants of Takata's operations will continue to make inflators to be used as replacement parts in the recalls, which are being handled by 19 affected automakers.
Takata Corp.in May reported a full-year group net loss of 79.59 billion yen (698.80 million US dollars), marking its third consecutive year of red ink, and booked a special loss of 132.98 billion yen owing to costs connected to the global recall. The company's stock has been suspended from trading on the Tokyo Stock Exchange and will be delisted in July. As Bill reported last month, "As of late April, they say, all of the auto makers in today's settlement had completed less than a third of their air-bag related recalls".More news: Germany and Chile advance in Fifa Confederations Cup
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Takata has been dealing with the largest automotive recall in USA history.
The defect in the inflators stems from use of the explosive chemical ammonium nitrate in the inflators to deploy air bags in a crash. Takata has already paid $125m into a fund for victims and $25m to the US Justice Department.
The lead attorney for people suing the automakers said in a statement that he doesn't expect the bankruptcy to affect the pending claims against the companies.
That settlement will speed the removal of faulty inflators from 15.8 million vehicles and compensate consumers for economic losses, Prieto said.
Jason Luo, president and chief executive of KSS, which is owned by China's Ningbo Joyson Electronic, voiced confidence in Takata's rehabilitation.
The company is headquartered in Sterling Heights even though it was acquired a year ago by Chinese automotive conglomerate Ningbo Joyson Electronic.
Toyota disclosed that because of the bankruptcy process it risked not being able to recover 570bn yen (£4bn) worth of recall costs from Takata.
One of the people briefed on the filings said that Key would get Takata's assets "free and clear" of past or future liabilities.
US-based Key Safety Systems (KSS) has bought all of Takata's assets, apart from those relating to the airbags.