Japanese car component firm Takata has filed for bankruptcy after facing huge compensation claims over exploding airbags linked to 17 deaths around the world.
Takata has filed for bankruptcy protection in both Japan and the US, and announced it is being bought for $1.6bn by its American rival, Key Safety Systems (KSS), owned by China's Ningbo Joyson Electronic Corp.
KSS will buy all parts of the company except the airbag manufacturing division, taking on most of its 60,000 employees worldwide.
Takata’s airbag inflators have been found to have defects that result in them exploding in humid conditions, sometimes, it is claimed, releasing metal shrapnel. As well as the 17 deaths, more than 100 people are believed to have been injured by the faulty devices.
"We believe taking these actions in Japan and the US is the best way to address the ongoing costs and liabilities of the airbag inflator issues with certainty and in an organized manner," Takata CEO Shigehisa Takada said in a statement.
Car makers including Honda, BMW and Toyota now face the Herculean task of recalling vehicles and replacing the airbags at their own cost – roughly 100 million inflators are believed to be affected.
KSS CEO Jason Luo said in a statement: “Although Takata has been impacted by the global airbag recall, the underlying strength of its skilled employee base, geographic reach, and exceptional steering wheels, seat belts and other safety products have not diminished."