Exploding airbag scandal forces Takata to file for bankruptcy

Aairbag maker Takata has filed for bankruptcy in its home nation of Japan and in the US, as the firm continues to bear the brunt of a scandal related to faulty airbags.

The company faces billions of dollars in liabilities and compensation over the faulty parts, which have been linked to at least 17 deaths and over 150 injuries worldwide. On Monday (26 June), the company filed for chapter 11 bankruptcy protection in the US and took similar actions in Japan. The company's stock has been suspended from trading on the Tokyo Stock Exchange and will be delisted in July.

"We're in a very difficult situation, and we had to find ways to keep supplying our products," said group president Shigehisa Takada.

"As a maker of safety parts for the automobile industry, our failure to maintain a stable supply would have a major impact across the industry. There was no other way."

The move cleared the path for a $1.6bn (£1.3bn) deal, which saw Detroit-based Key Safety Systems buy all of its rival's assets, excluding those related to the airbags.

Takada added filing for bankruptcy protection was the only way to ensure it could continue to supply replacements for the defective airbags. In some cases, airbags were fitted with a faulty inflation system, which expanded too rapidly, often resulting in metal shrapnel being shot at passengers.

The issue was attributed to the nitrate-based propellant used by the airbags' inflating system, which is prone to explode after prolonged exposure to hot and humid conditions.

Over 100 million vehicles, 70 million the US alone, fitted with Takata airbags have been recalled since 2004, when reports of an issue first arose.

In September last year, BMW recalled 110,000 cars in Japan, while Honda, Japan's second-biggest carmaker, recalled 668,000 vehicles for the same issue, bringing the tally of cars it has had to bring back to its dealership to 51 million.

Toyota has recalled over six million vehicles, while Mazda, FIAT and Ford are also involved in the operation, the largest safety recall in the automobile sector's history.

In January, the auto part maker agreed to pay a $1bn (£0.79bn, €0.89bn) fine after pleading guilty to fraud, but it faces liabilities worth up to $9bn after 10 carmakers who used its airbags launched further legal action against the company.

Japan's three main car producers, Honda, Nissan and Toyota, have fronted recall costs so far and claimed they were unlikely to be compensated.

The faulty airbags were produced between 2000 and 2008 but the scandal did not break until 2014, after the New York Times accused Takata of sweeping security concerns under the carpet.

The company admitted its responsibilities a year later, revealing the first airbag explosion had occurred in 2004, but had been dismissed as an anomaly by both itself and Honda. Takata has been heavily criticised for its role in handling the crisis and, despite the enormous number of recalls, it was recently forced to admit it did not know how many cars fitted with faulty airbags were still on the road.