HONG KONG — The company at the heart of one of the worst auto safety scandals in history has filed for bankruptcy,
Japan’s Takata was brought down by the huge cost of its exploding airbag crisis. The company’s faulty airbag inflators, which can blast shrapnel into drivers and passengers, have resulted in the recall of tens of millions of vehicles and been linked to 11 deaths in the U.S. and several others elsewhere.
With spiraling debts estimated at more than $9 billion, Takata said Monday it’s seeking bankruptcy protection in Japan and the U.S. It’s also selling off most of its business to a U.S.-based rival.
Key Safety Systems, a Chinese-owned company based in Michigan, is paying $1.6 billion for nearly all of Takata’s operations. But it’s staying away from the parts that deal with the airbag inflators, which will eventually be wound down.
The airbag scandal has led to a slow and painful demise for Takata, which started out as a textile manufacturer more than 80 years ago.
“The sad saga of Takata … has resulted in the implosion of one of the automotive industry’s oldest and most successful suppliers due to technical hubris, mismanagement and a systemic corporate culture of manipulation,” said Scott Upham, the CEO of Valient Market Research.
Earlier this year, the company admitted to manipulating key information about the faulty inflators for years even after they started killing and injuring people in cars. It pleaded guilty in the U.S. to a criminal charge of wire fraud for which it will have to pay $1 billion.
The money from the sale of the business to Key Safety Systems will be used to cover those and other costs resulting from the airbag recall.
But Takata shareholders are unlikely to get their money back, Upham said.
Takata’s stock plunged more than 65% last week following reports that its bankruptcy filing was imminent.