* KSS would create new company to buy Takata ops - Nikkei
* Rest of Takata would be liquidated under plan - Nikkei
* Trading in Takata shares suspended after Nikkei report
* KSS, Bain are preferred bidders for Takata - sources (Adds background, Takata comment)
TOKYO, April 27 (Reuters) - Trading in shares of Japan's Takata Corp was suspended on Thursday after a newspaper report that the embattled auto parts maker was considering filing for bankruptcy protection, selling all operations to a newly created company.
The Nikkei business daily said the plan would call for U.S.-based Key Safety Systems (KSS), a unit of China's Ningbo Joyson Electronic Corp, to sponsor the turnaround plan, spending nearly 200 billion yen ($1.8 billion) to create a company that would buy Takata's operations.
Takata itself would be left with heavy liabilities linked to the massive global recall of its air bag inflators, and is expected to be liquidated eventually, the Nikkei said.
A Takata spokesman said the company planned to issue a statement shortly through the Tokyo Stock Exchange.
Reuters reported earlier this month that car-parts maker KSS and Bain Capital LLC were the preferred bidder for Takata, whose faulty air bag components have been blamed for more than a dozen deaths worldwide. One source had told Reuters KSS and Bain plan to offer around 200 billion yen for Takata.
Discussions that include the steering committee tapped by Takata to oversee the search for a financial sponsor, automaker clients, suitors and bankers are now likely to run on until at least the end of May, sources have told Reuters.
Recent talks have focused on issues such as an indemnity agreement to cover reimbursement costs for air bag recalls, estimated to be as high as $10 billion.
Automakers including Honda Motor Co, which have been footing the bill for recalls dating back to 2008, want Takata restructured through a transparent court-ordered process such as bankruptcy, which would wipe out the firm's shareholder value, four automaker sources have told Reuters.
But Takata, the world's second-biggest air bag maker, is holding out for a "private restructuring" that would preserve some of the founding Takada family's 60 percent stake.
($1 = 111.2200 yen) (Reporting by Chang-Ran Kim; Editing by Richard Pullin and Randy Fabi)