TOKYO - Air bag maker Takata will file for bankruptcy protection under Japan's Civil Rehabilitation Act as early as June 26, according to sources. The company's total liabilities are expected to exceed 1 trillion yen ($9 billion) following a massive global recall of air bags linked to deadly explosions.
In addition, Takata's U.S.-based subsidiary TK Holdings, based in the state of Michigan, will file for Chapter 11 bankruptcy.
Takata will continue operations under a new entity. A new company will be created under American parts maker Key Safety Systems, which is owned by China's Ningbo Joyson Electronic. The new company is to purchase nearly all of Takata's operations for about 180 billion yen.
In addition to filing for bankruptcy protection, Takata plans to ask Sumitomo Mitsui Banking Corp. and other lenders for financial support worth as much as tens of billions of yen, to help its suppliers' financing and prevent them from slipping into bankruptcy.
Takata's Chairman and President Shigehisa Takada, a member of the company's founding family, is likely to resign after prospects of the restructuring become clear.