Takata may file for bankruptcy this week
Takata Corp. plans to file for bankruptcy as soon as this week, paving the way for a sale of the 84-year-old Japanese air-bag maker behind the biggest safety recall in automotive history.
The Tokyo supplier is expected to seek protection in its home country first, with its U.S. subsidiary filing for Chapter 11 bankruptcy shortly thereafter, according to a person familiar with the matter, who asked not to identified because the matter isn’t public and the timing could change.
Bankruptcy filings would put Takata a step closer to a sale to Key Safety Systems Inc., the U.S. air-bag maker owned by China’s Ningbo Joyson Electronic Corp. A Takata steering committee has recommended Key Safety as the preferred bidder for the manufacturer of faulty air bag inflators linked to at least 17 deaths worldwide. Mounting liabilities from having to replace more than 100 million of the devices forced Takata to seek a buyer that could help see through the costly restructuring process.
“They were trying to avoid this as much as possible,” Scott Upham, the president of Valient Market Research, said of Takata. “That’s what has been holding this up. But all of the bidders insisted that this happen so they can manage the liabilities.”
A bankruptcy filing would mark the end for a prominent Japanese company that started out as a textile maker and produced parachutes for the Imperial Japanese Army during World War II. Honda Motor Co., a Takata shareholder and the auto-parts maker’s largest customer, first started recalling Accord and Civic models in 2008 due to the flaw that may end up being Takata’s undoing.
The supplier’s air bag inflators use a propellant that can be rendered unstable after long-term exposure to heat and humidity, leading them to rupture and spray deadly metal shards at vehicle occupants.
More than a dozen automakers have recalled vehicles, include Volkswagen AG, Toyota Motor Corp. and General Motors Co.
Automakers have been going to Takata rivals to get replacement air bag inflators. Takata currently provides none of the replacement inflators for Honda and Acura vehicles under recall in the U.S., according to Chris Martin, a spokesman for the carmaker.
Takata agreed in January to pay $1 billion to U.S. regulators, consumers and carmakers.
The settlement includes a $25 million criminal fine, $125 million in victim compensation and $850 million to compensate automakers who have suffered losses from massive recalls.
The U.S. District Court in Detroit earlier this month said it will consider Kenneth Feinberg, a lawyer who has administered some of the nation’s highest-profile settlements, to replace former FBI Director Robert Mueller in overseeing the $1 billion settlement fund.
Mueller stepped down from his role to accept an appointment as special counsel to oversee the FBI’s investigation of Russia’s alleged efforts to influence the presidential election.
Mounting liabilities from having to replace more than 100 million of the devices forced Takata to seek a buyer that could help see through the costly restructuring process.