Chinese company steps in to buy out bankrupt Takata

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Japanese airbag manufacturer Takata Corp. filed for bankruptcy protection on Monday admitting that financial problems caused by safety concerns over its airbag inflators sent the company under.

The 84-year-old company has been linked to at least 17 deaths worldwide and more than 180 injuries after an inflator fault caused airbags to explode with so much force that they sent out scraps of metal shrapnel.

The company's financial statement reports a loss of 13 billion yen and 79.5 billion yen of net income in 2016 and 2017 respectively.

The company reports financial statements from regions including Japan, the Americas, Europe and Asia, with Honda, Renault Nissan, GM, Toyota and Volkswagen among its top clients.

A metal object that ripped through air bag from a vehicle that was involved in a collision where a 17-year-old high school student died from injuries after the air bag inflator was deployed on March 31, 2016 in Richmond, Texas. /CFP Photo

Chinese takeover

Takata filing for bankruptcy has cleared the way for a takeover by Key Safety Systems (KSS), the US auto parts maker which is a subsidiary of China's Ningbo Joyson Electronic.

KSS announced on Sunday that it had reached a deal with Takata to buy nearly all of its assets for around 1.57 billion US dollars.

KSS also said that it would retain almost all of Takata's employees and did not intend to close any of the company's manufacturing facilities.

Takata will then allocate the proceeds from the takeover to compensate victims and help repay automakers who have shouldered related costs from the defective airbags.

A recalled Takata airbag inflator is shown in Miami, Florida, US on June 25, 2015. /CFP Photo

What exactly is wrong with the airbags?

Reports found that the chemical Takata uses to blow air into the bags – ammonium nitrate – can degrade after long-term exposure to environmental moisture and high temperatures.

If the chemical degrades extensively, it can cause the inflators to become over-pressurized and rupture during air bag deployment, according to Associated Press.

The inflator recall will impact more than 42 million vehicles in the US, according to the government.

However 65 percent of the recalled vehicles have not been fixed, said US senator Bill Nelson quoting the National Highway Traffic Safety Administration.

Nelson also urged for accelerated repairs in early June.

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