Japanese air bag manufacturer Takata Corp. filed for bankruptcy protection today in Tokyo and the United States as it faces ballooning liabilities in connection with an extensive recall of defective inflators linked to the deaths of at least 16 people.

With the company rapidly losing value while struggling to reorganize its finances, filing for bankruptcy protection was the only option to ensure it could carry on supplying replacements, Takata’s president, Shigehisa Takada, said at a news conference.

Most of Takata’s assets will be bought by rival Key Safety Systems for about US$ 1.6 billion. The Chinese-owned company based in suburban Detroit said it won’t cut any Takata jobs or close any of Takata’s facilities.

In Mexico, Takata owns six plants located in the cities of Monclova, Torreon, Acuna, Agua Prieta and two facilities in Monterrey, where it also operates a Technical Center. In Monclova alone the company employs 5,000 workers.

Takata’s inflators can explode with too much force when they fill up an air bag, spewing out shrapnel. At least 100 million inflators have been recalled worldwide including 69 million in the U.S., affecting 42 million vehicles.

More than 70% of the airbags recalled in Japan have been replaced, and 36% in the U.S., said Hiroshi Shimizu, a Takata vice president. He said progress of the recalls in other countries was unknown.

The defect in the inflators stems from use of the explosive chemical ammonium nitrate in the inflators to deploy air bags in a crash. The chemical can deteriorate when exposed to hot and humid air and burn too fast, blowing apart a metal canister.

At least US$ 1 billion from the sale to Key Safety Systems is expected to be used to satisfy Takata’s settlement of criminal charges in the U.S. for concealing problems with the inflators. Of that amount, US$ 850 million goes to automakers to help cover their costs from the recalls. Takata already has paid US$ 125 million into a fund for victims and a US$ 25 million fine to the U.S. Justice Department.

MexicoNow

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