Takata, the Japanese company facing billions in liabilities stemming from its defective air bag inflators, is preparing to file for bankruptcy as early as next week as it works toward a deal for financial backing from U.S. auto parts maker Key Safety Systems Inc, according to sources.
Faults in Takata's airbags have been linked to at least 16 deaths and 180 injuries. The company now fighting not to become the latest casualty itself. Sources tell Reuters it will file for bankruptcy in Japan and the US. As a prelude to a funding deal with Key Safety Systems Incorporated. That would allow it to supply components, Reuters is told - while leaving its liabilities in a separate entity. (SOUNDBITE) (English) PANMURE GORDON CHIEF ECONOMIST, SIMON FRENCH, SAYING: "One key number for how it's come to this: 100 million recalls as a result of Takata's problems with its airbag system and the potential for health and safety risks associated with it. The liabilities estimated from that recall some about 9 billion dollars and that was more than the market capitalization of Takata at its height, let alone now where its marcap is just 350 million pounds." One other big number is the 850 million dollars the company owes to global carmakers under a settlement earlier this year. In January, it agreed to plead guilty to criminal wrongdoing and pay one billion dollars to resolve a US investigation. SOUNDBITE) (English) PANMURE GORDON CHIEF ECONOMIST, SIMON FRENCH, SAYING: "Actually, what you're seeing is the evolution of a corporate scandal that Takata's board didn't get a hold of quickly and ultimately will almost certainly lead to the failure of this company." Major carmakers worried, in the meantime, that filing for bankruptcy with no deal in place will disrupt the flow of replacement airbag inflators needed to fix the current problems. The Tokyo stock exchange has suspended trading in Takata shares following the latest reports.