Takata faces huge fines, and almost certainly lawsuits (which have already begun), over its defective airbags. Some experts believe that the Japanese company was not forthcoming about the technical failure that caused several serious accidents and deaths. If Takata goes bankrupt, which could certainly happen, claims against the company would be in limbo.

Takata’s revenue in the first half of its fiscal 2015 was just above $2.5 billion. It would barely make the Fortune 500. Due to its modest size, hundreds of millions of dollars in repairs and recalls and billions of dollars in liabilities for drivers harmed by its airbags could easily render it insolvent.

Claims and government fines against the airbag manufacturer might only be paid out in cents on the dollar in a bankruptcy, if they are paid out at all. A decision about the assets of Takata would include debt holders and equity holders. Japanese corporate bankruptcy laws are similar to those in the United States.

According to U.S. government figures, about 8 million vehicles have been recalled by their manufacturers because of the Takata airbag problem. Recently, the National Highway Traffic Safety Administration told the industry that it must recall all cars with Takata airbags.

The individual lawsuits against Takata have already started. This has triggered a drop of nearly 50% in its share value so far this year. Experts believe the problems with the airbags may extend back as fair as 2000, which means tens of millions of cars have been affected.

General Motors Co. (NYSE: GM) used its Chapter 11 filing as a means to protect it from product defects in cars made before it filed in mid-2009. There is no reason to think Takata will not use a similar strategy if it is forced into bankruptcy, although this might only help it going forward and not against claims for defects years ago. On the off chance Takata is liquidated, the ability to collect on claims and for governments to collect fines becomes even more difficult, if not impossible.

The Takata investigation, recalls and suits will last months, if not years. At the end of the period, there may be no company to collect from.

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