Takata Corp , 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 toward a deal for financial backing from U.S. auto-parts maker Key Safety Systems Inc., sources said on Thursday.

With liabilities exceeding ¥1 trillion ($9 billion), Takata's bankruptcy would be the largest corporate failure involving a manufacturer in postwar Japan.

The supplier is expected to seek protection in Japan first, with its U.S. subsidiary filing for Chapter 11 bankruptcy shortly thereafter, another source who asked not to identified said. Trading on Takata shares were suspended by Tokyo Stock Exchange from 8:20 a.m. Friday to confirm the authenticity of media reports, the exchange said on its website.