TOKYO (Reuters) - Takata Corp 7312.T will seek bankruptcy protection from creditors on Monday, two sources said, as the Japanese company faces billions of dollars in liabilities stemming from the biggest recall in automotive history.
The firm, whose defective air-bag inflators have been blamed for at least 16 deaths and more than 150 injuries worldwide, will file for protection in Tokyo District Court under the Civil Rehabilitation Act, Japan’s version of U.S. Chapter 11 bankruptcy, said the sources, one of whom has direct knowledge of the matter and one who was briefed on the process.
Takata will then seek bridge loans from the core banking unit of Sumitomo Mitsui Financial Group Inc (8316.T), which will provide tens of billions of yen (hundreds of millions of dollars) in bridge loans, one source said.
Takata spokesman Toyohiro Hishikawa said nothing had been decided regarding any filing or financing.
Shares in Takata changed hands for the first time since sources said last week that the struggling airbag maker was preparing to file for bankruptcy.
By mid-afternoon shares had more than halved in value to 116 yen, eroding Takata’s market capitalization by about 75 percent from a week ago to nearly $86 million now.
Any filing would coincide with a deal for financial backing from U.S. auto parts maker Key Safety Systems Inc. Key is expected to acquire Takata assets as part of a restructuring in bankruptcy, a source told Reuters.
Takata would stop making air-bag inflators after completing a global recall as part of the restructuring plan with Key, separate sources said.
Takata plans to begin bankruptcy proceedings in both the United States and Japan, sources have said. Such moves would culminate a long, tumultuous fall for the family-controlled company that grew to become a global supplier to most of the world’s major automakers.
Reporting by Taro Fuse and Maki Shiraki, writing by Thomas Wilson; Editing by Himani Sarkar