The tower that’s been teetering on the bring of collapse for the past few years has finally toppled over as Takata has officially filed for bankruptcy.
According to Bloomberg, the Japanese giant filed for bankruptcy protection in both the United States and Japan. It will mark “the biggest corporate failure in postwar Japanese manufacturing” and lead to the end of an 84-year-old company. But Takata and its operations won’t be disappearing entirely just yet.
The filing will pave the way for a major competitor to acquire Takata’s assets in a process that’s set to be completed early next year. Key Safety Systems, based in Japan but owned by China’s Ningbo Joyson Electronic Corp., will buy reportedly pay $1.6 billion to buy the bankrupt company. That will include retaining most (if not all) of Takata’s employees around the world, but won’t include any of its liabilities.
Takata is said to be a massive $10 billion in the hole, and that doesn’t even include most of the costs of the ongoing airbag recall. That alone would add another estimated $5 billion. The debts will be cleared through the bankruptcy proceedings, with the restructured Takata left to focus on supplying the hundred-plus million airbags deemed necessary to complete the recall – barely more than a third of which are estimated to have been completed in the United States at this point, with nearly three quarters finished in Japan.
Key Safety Systems won’t be touching Takata’s airbag division, which has taken out a $2-billion loan to fund its continued operations, and is expected to wind down once the recall is over and done with.