Takata, the air-bag maker behind the biggest safety recall in automotive history, plans to file for bankruptcy as soon as next week, according to a person familiar with the matter.
The Japanese company is expected to seek protection in its home country first, with its U.S. subsidiary filing for Chapter 11 bankruptcy shortly thereafter, said the person, who asked not to identified because the matter isn’t public and the timing could change. A representative for the Tokyo-based company couldn’t immediately be reached outside normal business hours.
The Nikkei reported earlier that Takata is expected to file for bankruptcy in Japan as early as this month, with liabilities exceeding $9.02 billion (1 trillion yen). The company’s steering committee has recommended Key Safety Systems Inc., a U.S. air-bag maker owned by China’s Ningbo Joyson Electronic Corp., as the preferred bidder for the entire manufacturer.
Finding a new owner is a crucial step in the restructuring of Takata, whose faulty air bag inflators have been linked to at least 17 deaths worldwide. Mounting liabilities from having to replace more than 100 million air bags forced the company to seek an acquirer that could get it through the costly restructuring process.
Honda Motor Co., a Takata shareholder and the auto-parts maker’s largest customer, first started recalling Accord and Civic models in 2008. 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 since, include Volkswagen AG, Toyota Motor Corp. and General Motors Co.
Takata in January agreed 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 Federal Bureau of Investigation 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.
–With assistance from David Welch