Safety procedures

26 June 2017 By Quentin Webb Follow @qtwebb

The airbag-maker filed for Chapter 11 with $10bln-plus of liabilities. Like Toshiba, this scandal reflects badly on Japan Inc’s governance and technical competence. This is a big opportunity for smaller Chinese-backed rival KSS, which gets most of the business for $1.6 bln.

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Takata, the Japanese airbag maker, filed for bankruptcy protection in the United States and Japan, and agreed in principle to sell most of its assets to Key Safety Systems for 175 billion yen ($1.6 billion).

Takata is at the centre of the auto industry’s biggest-ever recall. The U.S. business filed for bankruptcy protection with estimated liabilities between $10 billion and $50 billion.

In a statement dated June 26, Takata said its main U.S. arm TK Holdings and various subsidiaries filed for Chapter 11 in Delaware, while the parent company and subsidiaries started similar proceedings in Tokyo. It expects both processes to complete in the first quarter of 2018.

KSS will buy nearly all of Takata’s assets, except for some assets and operations linked to Takata’s problematic “phase-stabilized ammonium nitrate” airbag inflators. The PSAN operations will be run by a restructured Takata and will keep making inflators for recalls, but will eventually be wound down.

Some proceeds will fund an $850 million fund, already agreed with the U.S. Department of Justice, to help satisfy claims from drivers who bought cars with airbags using PSAN inflators.

KSS and Takata aim to deliver a definitive agreement in the “coming weeks”, and to close a deal in the first quarter of next year. Michigan-based KSS is wholly owned by Shanghai-listed Ningbo Joyson Electronic.

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