Takata Shares Climb After CFO Reiterates Company is Not Considering Bankruptcy

by San Antonio Attorney

Takata Corp. soared in Tokyo trading following its CFO’s reiteration that the company is not planning to file for bankruptcy as that could be disruptive to the manufacturing of auto parts, which are necessary for the completion of the safety recalls.

Takata, which is based in Tokyo, has issued safety recalls due to defective products that have been linked to about 17 deaths. The recalls may be higher than 100 million units.

The company surged 18 percent to 519 yen. According to the company, rumors about its intention to resort to a court-led bankruptcy were creating confusion. The company said it is going to take into account all of its creditors upon deciding on what course to take.

Takata said it is making sure that there is steady supply of parts in designing their restructuring. With bankruptcy, the company said it will be hard to keep making the auto parts. If that happens, the company said the stakeholders may suffer losses.

Takata CFO Yoichiro Nomura expressed the same concerns in November that a restructuring under court supervision could interrupt the supply of parts to automobile manufacturers. Nomura’s comments were made after its bonds and shares have fallen following reports that prospect buyers for the company are considering bankruptcy for auto parts makers to protect them from legal responsibilities.

While the company needs funding to pay for penalties and damages, bidders have been hesitant to move forward without any guarantee on the claims they deal with. For the moment, top clients like Honda Motor Co. have a secured interest in expecting a continuous supply of replacement auto parts from Takata to carry out a massive recalls, while possibly recovering expenses from the supplier.

Takata and fifteen automakers have been sued by the attorney general of New Mexico over defective air bags. The automakers included in the suit are Toyota, Ford, General Motors and Honda.

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