Rich Michaelson Magaliff, LLP
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As New York attorneys who work routinely with diverse commercial clientele on some of the most intricate and complex debt-related and restructuring matters possible, we flatly know that a Chapter 11 bankruptcy filing is far from being a boilerplate strategy and solution to seemingly insuperable financial challenges.

In fact, and as we note on a page of our firm’s website discussing the process and parameters of Chapter 11, this type of bankruptcy filing is “far more complex” than other types of bankruptcy and “not always the only option available to businesses.”

Sometimes, though, and following careful and thorough consultation with proven legal counsel, business principals determine that a Chapter 11 filing makes optimal sense as a response to crushing company debt and ongoing exactions.

Such is now the decided realization for top-rung executives at the Japanese auto supplier Takata, a long-time leading global maker of air bags used in vehicles across the United States and the world. Opting for Chapter 11 — which the company filed for last weekend, along with a tandem request for relief in Japan — seemed to some industry commentators to be the only viable choice remaining for Takata in the wake of its being “crushed by more than $1 billion in penalties and costs” relating to a huge scandal involving summarily exploding bags. The human cost relative to such malfunctions has been truly tragic, with a number of reported deaths and serious injuries globally.

Another air bag manufacturer/rival states that it will step in to acquire Takata’s “key assets,” with the approximately $1.6 billion in proceeds being used to pay for recall-related costs and settlement outlays.

That company (Key Safety Systems) cites its intent to keep Takata workers on board, which one Takata principal contends will combine the two competitors in a manner that will leave the new business combination “well positioned for long-term success.”

Much work remains to be done, of course, with further material details yet to emerge. Ultimately, the deal will require approval from a federal bankruptcy court.