Takata Shares Plunge on Reports of Bankruptcy
Takata might be getting nearer to its end. Shares of the auto parts business based in Japan plunged by 17% Monday following a number of reports that its scandal involving airbags that exploded might soon cause it to enter bankruptcy.
On Friday, the stock was suspended due to the reports, which said the struggling company was planning to file bankruptcy this week.
Wall Street analysts have warned that the company might have to file bankruptcy because of the tremendous amount of costs involved with its airbag scandal that resulted in a recall of millions of vehicles across the globe.
The defective inflators for airbags made by Takata that can explode then send shrapnel into both drivers and passengers were blamed for 11 deaths across the U.S. and several more in other parts of the world.
As this crisis has grown, Takata has attempted to figure out how to survive and keep supplying the replacement parts to the carmakers affected, such as Toyota and Honda.
The process that would make all vehicles in just the U.S. safe again might take as long as seven more years. Takata announced back in February it was holding negotiations to sell its business to Key Safety Systems based in Detroit, Michigan, which is owned by a company based in China.
According to reports from late last week by media in Japan and other places, Takata would file bankruptcy in Japan followed by the U.S.
The sale to Key Safety of the company’s business operations would then take place following the filing. Late Friday the company released a statement that said all options continue to be considered for its restructuring and that there has yet to be any decision made of any kind.
Shares of the company have dropped in value by more than 50% during 2017. They are worth only one eighth as much as in the early part of 2014.
During January, Takata filed a guilty plea to criminal charges by prosecutors in the U.S. and agreed it would pay a fine of $1 billion.
The majority of that money was given to carmakers that in turn have been making the repairs to the airbags with the faulty air inflators.
Three former executives at Takata were charged by U.S. prosecutors with conspiracy and wire fraud in relation to sales of the airbags with the exploding air inflators.