Corrections and clarifications: This story originally misstated the parties that settled economic-loss claims involving Takata air bags.
Troubled auto supplier Takata is tumbling toward a widely expected bankruptcy filing following a costly scandal that has killed at least 16 people worldwide.
The Japanese supplier recently pleaded guilty in a U.S. court to criminal charges for its handling of the scandal, which involved exploding air bags.
The company agreed to pay $1 billion in penalties, including funds for people injured as a result of the fiery shrapnel hurled from its air bags. The defect has been blamed for more than 100 injuries and 16 deaths.
More than 42 million vehicles were equipped with the potentially defective parts, triggering the largest recall in U.S. history.
With reports circulating that the company could file for court protection as early as this week, here are several factors to watch:
1. Repairs won’t stop: Although bankrupt companies can sometimes seek to sever obligations such as warranties, Takata will be required to prioritize the production of replacement parts.
Automakers have contributed hundreds of millions of dollars to accelerate the repairs, ensuring that the recall campaign will continue unimpeded after the bankruptcy filing occurs.
As of May 26, automakers had replaced 38.1% of air bags affected by the recall, according to the National Highway Traffic Safety Administration.
2. Takata likely will get new ownership: Chinese-owned Key Safety Systems is widely expected to acquire Takata as part of the company’s bankruptcy restructuring plan.
Key Safety Systems, whose U.S. headquarters is in Sterling Heights, Mich., would become the world’s second-largest air bag manufacturer if the deal goes through, according to Evercore ISI analysts. The…