Takata Corp., the company involved in the biggest product recall in the automobile industry, recently decided to file for Chapter 11 bankruptcy. The company also reported that the company, Key Safety Systems, based in the United States, would purchase it for $1.6 billion. Chapter 11 bankruptcy protection is designed to help companies in Massachusetts and elsewhere to overcome their financial crises and bounce back in the marketplace.
Takata’s airbags are linked to a minimum of 17 deaths worldwide. As a result, it is faced with tens of billions of dollars in liabilities and costs stemming from lawsuits and recalls spanning nearly a decade. The company specifically had liabilities of between $10 billion and $50 billion at the time of its bankruptcy filing on a recent Sunday.
The company’s final liabilities will depend on what happens as a result of discussions with automaker customers who have shouldered the majority of the product replacement costs. However, Key Safety Systems, which is based in Michigan, has agreed to go ahead and take over the viable operations at Takata. The remaining operations will be reorganized so that millions of airbag inflator replacements will continue to be produced.
As part of the Chapter 11 bankruptcy filing, the company stated it will keep nearly all of its 60,000 workers in 23 countries. Fortunately, with Chapter 11 bankruptcy protection, a company can generally continue to operate without interruption while reorganizing its debt and paying it back in a more efficient manner. An attorney in Massachusetts can offer guidance with each step of the Chapter 11 bankruptcy filing process.
Source: cnbc.com, “Airbag maker Takata files for bankruptcy in Japan and US, seeking $1.6B aid from Key Safety Systems“, June 26, 2017