Takata bankruptcy may put recall costs squarely on automakers

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The deal has been announced after the Japan-based Takata, which manufactures seatbelts, airbags and child seats, filed for bankruptcy protection in the us and its home market.

The sale of its business to Key Safety Systems won't save everything from the Takata bankruptcy.

But in certain limited cases, Honda still uses ammonium nitrate inflators from Takata as replacements for those recalled, Kachi said.

US auto parts maker Key Safety Systems Inc., however, has put in an offer to buy the struggling firm, the majority of its assets and its subsidiaries, including its seatbelt and child seat businesses, for 175 billion yen, providing the firm with enough liquidity to continue to meet client orders and avoid hefty layoffs from its workforce.

If signed off, it would be Joyson's third worldwide deal after it acquired Michigan-based safety technology company Key Safety Systems for US$920 million past year. One of Takata's lawyers, Nobuaki Kobayashi, said it was too early to estimate the total eventual cost of the recalls and would not confirm Japanese media reports that they exceeded 1 trillion yen ($9 billion).

In addition to its US-based subsidiary in the state of DE, which is under the protection of Chapter 11 on bankruptcy, its various units, particularly in China and Mexico, are concerned.

Industry sources say Takata would be able to complete the current global recall under bankruptcy, but could face problems if further recalls are required down the line.

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The inflator operations are expected to be run by a reorganized Takata following the transaction closing and eventually will be wound down, the companies said.

Jason Luo, president and CEO of KSS, said in a statement the " underlying strength" of Takata's business had not diminished despite the airbag recall, citing its skilled employee base, geographic reach and other safety products such as seat belts.

As reported by Reuters, Takata has been at the centre of an ongoing safety scandal for well over a decade, after defective airbags built by the company were linked to at least 17 deaths.

Global transport authorities have ordered about 100 million inflators to be recalled, as the ammonium nitrate compound used to inflate has been found to become volatile with age and prolonged exposure to heat, causing the devices to explode.

2001: First recall issued relating to Takata's air bags, for the 2000-2001 model year Isuzu Rodeo and the Honda Passport.

The deal is aimed at allowing Takata to continue operations without any interruptions and having a minimal number of disruptions to its important supply chain.

Takata will essentially be divided into two companies. Toyota said Takata owes it some 570 billion yen in recall-related costs, but the auto giant and domestic rivals Nissan and Honda admitted Monday there was little chance of recouping that money in bankruptcy court.

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The problem, though, is that 100 million of the Takata inflators worldwide have been recalled, 69 million in the USA alone in the biggest automotive recall in American history.

The Tokyo Stock Exchange suspended trading of Takata shares Monday and said it would delist Takata stock Tuesday.

Takata said it was facing $10bn-$50bn (£8bn-£39bn) in liabilities over the airbags' faulty inflators, which could explode with too much force, sending metal shrapnel flying.

More than a dozen deaths are linked to the company's faulty airbags.

Another $125 million will go to victims and Takata will pay a $25 million fine to the US government.

The penalty includes a $25m criminal fine, a $125m compensation fund for victims, and an $850m restitution fund for carmakers.

Key also said it won't cut any Takata jobs or close any of Takata's facilities.

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