The troubled supplier is close to filing bankruptcy, sources claim. The filing is expected to occur on Monday in Japan.
Long-troubled auto supplier Takata Corp. will file bankruptcy on Monday, as it seeks to reorganize billions of dollars in liabilities tied mostly to its defective airbag inflators.
The Japanese company, according to Reuters, will file for protection in Tokyo District Court under the Civil Rehabilitation Act, which is that country’s version of U.S. Chapter 11 bankruptcy. Reuters tied its report to sources, one of whom has direct knowledge of the matter and one who was briefed on the process.
Takata will seek bridge loans from the banking unit of Sumitomo Mitsui Financial Group Inc., “which will provide tens of billions of yen (hundreds of millions of dollars) in bridge loans,” Reuters reported.
Earlier reports suggested Takata would file bankruptcy simultaneously in Japan and the U.S., where it has been negotiating with Key Safety Systems Inc. to acquire Takata’s assets as part of the corporate restructuring of the company.
(Takata airbag recall effort sputtering. Click Here for the story.)
However, it appears now that a filing in the U.S. will come after the Japanese filing. As part of the reorganization of Takata by Key, the Japanese supplier will exit the airbag business after it completes the task of building the necessary number of replacement kits for its recall, which was the largest in U.S.
The company’s airbag inflators become unstable over time and can explode with too much force causing pieces of metal and plastic shrapnel to fly through a vehicles cabin. The problem has resulted in 16 deaths worldwide and more than 100 injuries.
(Four automakers settle Takata airbag suit for $553 million. Click Here for the details.)
The recall involved more than 15 automakers and more than 100 million airbags, accounting for both the driver and passenger side airbags in most cases. As part of its liabilities Takata owes $850 million to those global automakers, as part of a settlement reached earlier this year. The company has until 2018 to pay the $850 million.
(Takata airbag recall effort sputtering. Click Here for the story.)
In addition to the $850 million, Takata agreed to pay a $25 million criminal fine, $125 million in victim compensation.