The Japanese automobile airbag maker Takata is expected to file for bankruptcy protection as early as next week, as it works towards a deal for financial backing from US auto parts maker.

The Nikkei Daily in Japan reported that Michigan-based Key Safety Systems Inc. will create a new company to purchase US$1.6 Billion in Takata's assets to continue supplying air bags, seat belts and other products.  The liablities would be spun off into a separate entity. 

Airbag

Takata faces billions of dollars in liabilities from the discovery of defective inflators that can explode with excessive force, unleashing metal shrapnel inside cars and trucks.  The company began recalls in 2008, eventually encompassing more than 100 million faulty units around the world used in vehicles made by 19 automakers, including Honda, Toyota, Ford, Volkswagen, and others.  The recalls are to continue through at least the end of 2019.

Automakers were concerned that a Takata bankruptcy coming before a buy out would disrupt the production of replacement air bag inflators.  More than 65 percent of 46.2 million recalled Takata air bag inflators in the United States have not been repaired.

Key is owned by Chinese supplier Ningbo Joyson.  The Tokyo stock exchange temporarily suspended Takata shares after the news broke.