(Reuters) — Embattled airbag maker Takata Corp on Monday (June 26) filed for bankruptcy protection in Japan and said it would seek $1.588 billion in financial aid from U.S.-based auto parts supplier Key Safety Systems (KSS).
The KSS deal would help it deal with the fallout from its defective airbag inflators at the center of the global auto industry’s biggest ever recall, Takata CEO Shigehisa Takata said in a news conference in Tokyo on Monday.
The filing at the Tokyo District Court followed a Chapter 11 bankruptcy protection filing in the United States. As part of the bankruptcy protection plans, KSS would acquire all of Takata’s assets barring certain assets and operations related to the airbag inflators involved in the global recall in the planned deal worth $1.59 billion. The company would keep operations of its affected inflators for now to continue supplying recall replacement parts, and would eventually wind down those operations, Takata said.
Japanese Trade Minister Hiroshige Seko said on Monday that Takata Corp’s filing for bankruptcy was unavoidable given the severity of its product recalls, and he asked ministry officials to devise a scheme to provide 100 percent loan guarantees to small businesses that may be affected by Takata’s bankruptcy.
“We need to do our best to finance small businesses that may be affected (by Takata’s bankruptcy). I asked ministry officials to devise the first safety net scheme to provide 100 percent loan guarantees to small businesses that have a certain level of business relationship with Takata, as well as to place inquiry counters in government’s financial facilities and small business groups across Japan,” Seko said.
The CEO of Takata Corporation, Shigehisa Takata said, “”At a suitable time after the business transfer is implemented, I will resign taking the operational responsibility and be succeeded by the new management.”
“I deeply apologize from my heart for damaging all those involved and the creditors,” he added.
Takata, an 84-year-old company, faces billions in lawsuits and recall-related costs to its clients, including Honda, Takata’s biggest customer, Toyota Motor Corp, and others which have been paying recall costs to date. The company suspended trading its shares on Monday morning, the Tokyo Stock Exchange said its shares would be delisted on July 27.