A sign with the TAKATA logo is seen outside the Takata Corporation building in Auburn Hills, Michigan May 20, 2015. REUTERS/Rebecca Cook/File Photo

TOKYO (Reuters) - Shares in Japan's Takata Corp 7312.T lost a fifth of their value on Monday after sources said Key Safety Systems (KSS) had been selected to lead its turnaround, fanning concern that a court-led restructuring was on the cards.

The Nikkei business daily, which first reported the news of KSS’s selection, said automakers would support the pick on condition Takata pursue a court-mediated turnaround in both Japan and the United States - a move that could wipe out shareholders’ equity.

Shares in Takata, at the center of the world’s biggest auto industry recall to date, fell 19 percent or by their daily limit of 100 yen after sell orders dwarfed bids all day. The company is now valued at $322 million.

The steering committee leading the selection process had told Takata’s automaker clients of its decision, three sources told Reuters on Saturday.

In a statement late on Saturday, Takata denied that it had selected KSS as its sponsor or a court-led restructuring as the way forward. KSS declined to comment.

KSS, a U.S.-based auto parts supplier owned by China's Ningbo Joyson 600699.SS, and other bidders have favored a court-led process to cap their exposure to Takata's existing liabilities, sources have said. Those liabilities are estimated by some analysts to be as high as $10 billion for recall costs alone.

Such an option could deal a huge blow to shareholders, including the founding Takada family, a major investor. Takata argues that a court-led restructuring could disrupt its supply-chain and affect its ability to pay suppliers.

Swedish air bag maker Autoliv Inc ALV.N had also been bidding to lead Takata's restructuring, sources have told Reuters.