* KSS would create new company to buy Takata ops -Nikkei
* Rest of Takata would be liquidated under plan -Nikkei
* Takata endorses KSS as sponsor candidate, says no deal yet
* Trading in Takata shares suspended after Nikkei report (Adds Takata statement)
By Naomi Tajitsu and Chang-Ran Kim
TOKYO, April 27 Trading in Takata Corp shares was suspended on Thursday after a report that the Japanese airbag maker at the heart of the car industry's biggest-ever recall is considering a bankruptcy plan that will create a new company and ringfence its liabilities.
The Nikkei business daily reported Chinese-owned car parts maker Key Safety Systems (KSS), the company's preferred bidder, would sponsor the turnaround plan by injecting 200 billion yen ($1.8 billion) and helping create a new operating company.
That money would be transferred to Takata to help settle claims linked to faulty air bags that have been blamed for at least 16 deaths worldwide.
Agreement on a restructuring deal, eight years after the first death, would enable Takata to draw a line under the crisis and help it continue supplying replacement air bag inflators, as well as selling seat belts and other vehicle components.
In a statement, Takata acknowledged that its steering committee had endorsed KSS as a sponsor candidate, but said it had not reached any decision on its restructuring.
Reuters reported earlier this month that a group including KSS, a U.S. unit of China's Ningbo Joyson Electronic Corp , and Bain Capital LLC was Takata's preferred bidder, and would offer around 200 billion yen.
Takata has long insisted it prefers a privately arranged restructuring, but people with knowledge of the situation have told Reuters that the company has come under increasing pressure from potential bidders and automaker clients to agree to a court-ordered process, which would provide more transparency.
Automakers including Honda Motor Co Ltd, which have been paying for recalls for almost a decade, have insisted on the court route - even if that would wipe out shareholder value, hitting the founding Takada family, with a 60 percent stake.
Takata's steering committee and potential bidders have been negotiating for months, with talks dragging due to differences over issues including price and how to handle risks for suppliers, two sources with knowledge of the issue have told Reuters.
A spokeswoman for KSS declined to comment, while Hong Kong-based representatives for Bain could not immediately be reached.
Discussions that involve the automaker's clients, suitors and bankers are likely to run on until at least the end of May before a decision is reached, sources have said.
In January, Takata agreed to plead guilty to criminal wrongdoing in the United States and to pay $1 billion to resolve a U.S. federal investigation into its inflators.
A federal judge in Detroit this month said he plans to name former Federal Bureau of Investigation director Robert Mueller to oversee nearly $1 billion in Takata restitution funds, as part of a U.S. Justice Department settlement.
Takata shares are indicated to fall about 8.5 percent from Wednesday's close.
($1 = 111.2200 yen) (Reporting by Chang-Ran Kim, Naomi Tajitsu, Tim Kelly and Junko Fujita; Editing by Clara Ferreira-Marques and Randy Fabi)