By Jason Siu Jun 16, 2017

The massive Takata airbag recall is taking a toll on the company.

Facing billions in liabilities from the defective airbag inflators, Reuters reports Takata is preparing to file for bankruptcy, and it could happen as early as next week. Takata is working towards a deal for financial backing from the U.S. auto parts maker Key Safety Systems Inc., according to sources. It is expected that Key Safety Systems will acquire Takata assets as part of a restructuring in bankruptcy.

SEE ALSO: Massive Takata Airbag Recall Results in $1B US Settlement

The Nikkei business daily reports a new company will be created under Key, which will purchase Takata operations for about $1.6-billion, and will continue supplying airbags, seat belts, and other products, leaving liabilities behind in a separate entity.

The Tokyo Stock Exchange has suspended trading in shares of Takata following the reports of pending bankruptcy.

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With more than 65 percent of 46.2-million recalled Takata airbags in the U.S. still not repaired, the bankruptcy could disrupt the production of replacement airbags inflators. The company has until early 2018 to pay $850-million owed to automakers, or within five days of securing a financial backer. There’s a possibility a final deal with Key may not be reached before Takata files for bankruptcy, as the company plans to begin proceedings in both the U.S. and Japan.

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