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Embattled Airbag Maker Takata Mulls Bankruptcy

Japan's Takata is considering a bankruptcy filing for its U.S. unit as the airbag maker looks for a sponsor to help pay for liabilities related to its faulty inflators, a person briefed on the matter told Reuters.

Takata, which has retained investment bank Lazard as an adviser, has been working to choose a backer for its turnaround as it faces huge costs related to the global recall of millions of potentially faulty inflators.

File photo of the logo of Takata Corp in Tokyo
REUTERS/Toru Hanai/Files REUTERS

It is struggling to supply replacement parts for its potentially defective inflators, which have been linked to at least 16 deaths worldwide, mainly in the United States, and have led to the industry's largest ever recall.

A Chapter 11 filing for its U.S. unit, Michigan-based TK Holdings, which accounts for nearly half of Takata's global sales, was one option it was considering although no filing was expected soon, the source said.

A filing would not be imminent because the company still had to select a sponsor and finalize terms, and reach an agreement with automaker creditors, the source said.

The inflators in question use a chemical compound which can explode after prolonged exposure to hot conditions, spraying metal shrapnel. About 100 million have been ordered to be withdrawn globally.

Trading in Takata shares was halted on Friday after the Nikkei business daily initially reported it was preparing for a possible bankruptcy filing.

Takata said in a statement that it had nothing to announce in relation to the media report.