Takata To File For Bankruptcy As Early As Next Week

Takata, one of the biggest automotive suppliers in the world is preparing to file for bankruptcy after its faulty airbags led to the biggest safety recall ever in the history of the automotive industry. A bankruptcy filing would mark the end for the 84-year old Japanese company that started out as a textile maker and produced parachutes for the Imperial Japanese Army during World War II.

The filing could come as soon next week in both Japan and the US, where it has a subsidiary and is seeking for a buyer.

Shares of Takata were temporarily suspended on the Tokyo stock exchange following media reports of preparations for a bankruptcy filing.

Takata faces billions of dollars in liabilities over the airbag recall. So far about 100 million Takata airbags, which can rupture with deadly force and spray shrapnel at passengers, have been recalled globally. The faulty airbags have been linked to at least 18 deaths and more than 180 injuries worldwide.

Japan’s Nikkei newspaper estimates the company faces liabilities exceeding 1 trillion yen (RM38bn). The company however, has not commented on the reports in Japan, from sources close to the case, of imminent bankruptcy.

The company is said to be in talks about a potential deal with Key Safety Systems, a U.S. air-bag maker owned by China’s Ningbo Joyson Electronic Corp. Key is expected to acquire Takata assets as part of a restructuring in bankruptcy.

A new company created under Key Safety would purchase Takata operations for about 180 billion yen (RM6.8bn) and will continue to supply air bags, seat belts and other products, leaving liabilities behind in a separate entity.

In January, Takata agreed to pay $1bn (RM4.2bn) in penalties in the US for concealing dangerous defects in its exploding airbags. It also pleaded guilty to a single criminal charge.

The firm paid a $25m (RM106m) fine, $125m (RM534m) to people injured by the airbags and $850m (RM3.6bn) to carmakers that used them. But it still faces the possibility of more lawsuits.

Most major carmakers, including Volkswagen, Nissan, Ford and Toyota have been affected by the recall. Honda, which as Takata’s biggest customer is one of the worst affected by the faulty air bag inflators.

Source: BBC, Reuters