Takata preparing to file for bankruptcy, source says

TOKYO — Takata, the troubled Japanese air bag maker, is moving to file for bankruptcy protection as soon as next week in preparation for the company to sell itself to a rival, a person briefed on the matter said Friday.

Any such move has long been expected, as the company faces billions of dollars in liabilities stemming from the recall of millions of its air bags, some of which have burst violently, causing deaths and injuries.

Takata’s plans are still being ironed out, said this person, who requested anonymity to discuss confidential plans. But the company is contemplating filing for bankruptcy protection, first in Japan and then in the United States, as soon as next week, and in any case before its annual shareholder meeting June 27.

It would then announce an agreement in principle to sell its business to Key Safety Systems, a Michigan-based auto parts maker owned by a Chinese company, the Ningbo Joyson Electronic Corp. Such a sale would take place within the confines of Chapter 11 rules in the U.S., where Takata would leave the

bulk of its liabilities with a legal entity in bankruptcy court while its operations are taken over by Key Safety.

Key Safety has been one of the companies bidding for Takata’s operations, according to people familiar with the process, and has been seen as a frontrunner.

An earlier report on the potential plan by financial daily Nikkei prompted a brief suspension of Takata’s shares on the Tokyo Stock Exchange. The publication said Key Safety Systems would pay roughly $1.6 billion for Takata’s business.

According to the Nikkei, that money would be used to cover Takata’s liabilities, including projected payouts from accident-related lawsuits, which would be held by a separate legal entity. In effect, Takata would be broken up and disbanded.

Exploding Takata air bags have been linked to at least11deaths.