Takata, (TKTDY) which has retained investment bank Lazard as an adviser, has been working to choose a backer for its turnaround as it faces huge costs related to the global recall of millions of potentially faulty inflators.
It is struggling to supply replacement parts for its potentially defective inflators, which have been linked to at least 16 deaths worldwide, mainly in the United States, and have led to the industry’s largest ever recall.
A Chapter 11 filing for its U.S. unit, Michigan-based TK Holdings, which accounts for nearly half of Takata‘s global sales, was one option it was considering although no filing was expected soon, the source said.
A filing would not be imminent because the company still had to select a sponsor and finalize terms, and reach an agreement with automaker creditors, the source said.
The inflators in question use a chemical compound which can explode after prolonged exposure to hot conditions, spraying metal shrapnel. About 100 million have been ordered to be withdrawn globally.
Trading in Takata shares was halted on Friday after the Nikkei business daily initially reported it was preparing for a possible bankruptcy filing.
Takata said in a statement that it had nothing to announce in relation to the media report.
Takata announces its first-half financial results later in the day, with the focus on whether it revises its full-year outlook and its cash position.
It anticipates a net profit of 13.0 billion yen ($126.04 million) in the year to March, although this largely excludes the impact of the recalls as the company so far has only outlined a small number of related liabilities.
As of March, it held 57.61 billion yen in cash and cash equivalents, down 24% from a year ago.
For more on the Takata airbag recall, watch Fortune’s video:
If Takata were found to be solely responsible for the inflator defect, it could face a bill of about $13 billion for recalls announced so far, based on calculations from experts and automakers including General Motors.
It also faces U.S. lawsuits.
So far, automakers have paid most of the recall costs while Takata and its customers thrash out how to divide responsibility.
Bidders for the company include Japanese inflator maker Daicel and Sweden’s Autoliv, sources have said.