Takata Said to Consider Bankruptcy, Asset Sale to New Company

Takata Corp. is considering a scheme to file for bankruptcy protection and sell its assets to a newly created company, thus separating ongoing operations from liabilities related to the company’s exploding airbag inflators, The Nikkei says.

Under the plan, Takata’s assets would be sold for about 200 billion yen ($1.8 billion) to a new airbag company set up by U.S.-based Key Safety Systems Inc., a unit of China’s Ningbo Joyson Electronic Corp. Takata chose Key in February as its preferred bidder.

Bankrupt Takata would use proceeds from the asset sale to help pay down liabilities before eventually being liquidated, according to The Nikkei. Carmakers would cover future recall costs and agree not to seek compensation from the new operating company.

Analysts have estimated Takata’s total exposure to recall costs, regulatory fines and legal settlements at $10 billion.

Most of the Takata’s liabilities are to its carmaker customers. More than a dozen of them are replacing roughly 100 million Takata inflators that could misfire when triggered by a crash. The devices have been linked to at least 16 fatalities and more than 100 injuries worldwide.