Takata Corp, the Japanese company facing billions in liabilities stemming from its defective air bag inflators, is preparing to file for bankruptcy as early as next week as it works towards a deal for financial backing from US auto parts maker Key Safety Systems, sources say.

Takata, one of the world's biggest automotive suppliers, has been working for months to complete a deal with Key Safety.

A person briefed on the matter told Reuters that Key was expected to acquire Takata assets as part of a restructuring in bankruptcy.

The Nikkei business daily reported a new company created under Key would buy Takata operations for about 180 billion yen ($A2.1 billion) and continue supplying airbags, seat belts and other products, leaving liabilities behind in a separate entity.

Takata declined to comment.

Michigan-based Key, owned by Chinese supplier Ningbo Joyson, did not immediately respond to a request for comment.

The Tokyo Stock Exchange said on Friday it had suspended trading in shares of Takata following media reports of preparations for a bankruptcy filing.

At its previous close, it had a market value of $US360 million ($A474 million).

Also at stake is $US850 million owed by Takata to major global auto makers under a settlement agreed to this year stemming from the automotive industry's largest ever safety recall.

Takata inflators can explode with excessive force, unleashing metal shrapnel inside cars and trucks.

In January, Takata agreed to plead guilty to criminal wrongdoing and to pay $US1 billion to resolve a Justice Department investigation into ruptures of its airbag inflators linked to at least 16 deaths worldwide.

They also have been blamed for more than 180 injuries worldwide.

A federal grand jury in January indicted three former Takata executives for criminal wrongdoing in connection with the safety defect.