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

Matt Posky
by Matt Posky

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]

Matt Posky
Matt Posky

A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.

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