Chain-reaction bankruptcies yet to result due to Takata

Takata’s file for bankruptcy under the Civil Rehabilitation Law on June 26 is the largest ever for a Japanese manufacturer in the postwar era. Teikoku Databank announced that there has been no chain reaction of bankruptcies during the five months between then and November 25.

Takata, which is in the midst of civil rehabilitation proceedings, signed a definitive agreement on November 21 to transfer its assets to U.S. company Key Safety Systems (KSS). Also, the Tokyo District Court made an approval to extend the submission date for its revival plan to February 28, 2018 from its initially scheduled date of November 27, 2017.

Takata’s total liabilities are estimated at 1.08 trillion yen, which makes it the largest bankruptcy in the manufacturing industry topping Panasonic Plasma Display’s 500 billion yen in liabilities (special liquidation in November 2016). Despite its long list of clients, there has been no chain reaction of bankruptcies.

This is likely due to the financial support from automakers and the local governments of where Takata’s plants are located as well as the full repayment of debt to its key parts suppliers.

In terms of a mid- to long-term perspective, Teikoku Databank indicates that there is still the risk of Takata’s bankruptcy having some impact in Shiga and Saga prefectures, where Takata’s main plants are located, depending on the direction of KSS and its automotive clients.

Written by Response Editorial Department
(Translated by Masayuki Shikata)