Shocker: Takata Bidders Want Court Involved in Company's Turnaround

Matt Posky
by Matt Posky
shocker takata bidders want court involved in companys turnaround

The remaining bidders for the ailing Takata Corporation are insisting on a court-mediated turnaround for the airbag supplier’s operations. Takata is in the midst of selecting a financial backer after incurring billions of dollars in costs to replace tens of millions of defective airbag inflators linked to a minimum of sixteen deaths.

However, Takata has stated it would much prefer an out-of-court process for its operations to ensure the uninterrupted supply of replacement inflators. Keeping the turnaround private also would also be a way for the founding Takata family to avoid the complete obliteration of the company’s share values.

Asia’s Nikkei reports that Swedish air bag maker Autoliv Inc and U.S. parts supplier Key Safety Systems (KSS) will reveal their proposals for a court-led restructuring program of the Japanese company sometime this week. As potential bidders for Takata, both parties prefer a court-assisted turnaround of its business, which would offer legal cover and greatly limit exposure to the company’s existing liabilities. The company’s recall expenditures alone could be as high as $10 billion.

While its financial future looks bleak, Takata has struggled to manufacture the millions of replacement inflator parts required for the record-setting recall. As a result, it has reached out to its competitors, including Daicel, Autoliv, and ZF TRW to support its production efforts.

Automakers affected by the recalls, including Honda, Toyota, and Ford, have been paying to recall the inflators themselves due to the massive number of faulty units. Many have stated that the compensation included in Takata’s U.S. settlement would do very little to cover those costs.

[Image: Takata]

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