Beleaguered airbag maker files for bankruptcy

DETROIT — Japanese air bag maker Takata Corp. has filed for bankruptcy protection in Tokyo and the U.S., overwhelmed by lawsuits and recall costs related to its production of faulty air bag inflators. The company announced the action Monday morning Tokyo time.

Takata was done in by defective airbag inflators that can explode with too much force, spewing out shrapnel. They’re responsible for at least 16 deaths and 180 injuries and have touched off the largest automotive recall in U.S. history. So far 100 million inflators have been recalled worldwide including 69 million in the U.S., affecting 42 million vehicles.

Rival Key Safety Systems, based in suburban Detroit, will buy most of Takata’s assets for $1.6 billion US and take over its manufacturing operations to make seatbelts, airbags and other automotive safety devices, according to two people briefed on the matter.

Key is owned by Ningbo Joyson Electronic Corp. of China.

Some remnants of Takata will be folded into an entity with a different name to keep manufacturing inflators used as replacement parts in recalls, said the people, who didn’t want to be identified because the bankruptcy terms have not been made public.

At least $1 billion from the sale will be used to satisfy Takata’s settlement of criminal charges in the United States for concealing problems with the inflators.

One of the people briefed on the filings said that Key would get Takata’s assets “free and clear” of past or future liabilities. That makes it unclear whether anyone injured by inflators in the future would have any legal recourse against either company.

Takata’s troubles stem from use of the explosive chemical ammonium nitrate in the inflators to deploy airbags in a crash. The chemical can deteriorate when exposed to hot and humid air and burn too fast, blowing apart a metal canister.