Toshiba Corp. is finalizing a plan to let its troubled U.S. nuclear unit Westinghouse Electric Co. file for Chapter 11 bankruptcy protection by the end of the month, sources close to the matter said Friday.
The embattled Japanese conglomerate is looking to use the bankruptcy filing to finalize losses related to the unit in the fiscal year ending March 31 because its major creditors are urging the company to do so.
Still, the filing could be delayed till April, the sources said. Some executives are concerned the decision could affect whether it wins approval at an extraordinary shareholders meeting next Thursday to spin off its prized chip business as part of restructuring steps.
The U.S. government has also reportedly questioned the bankruptcy plan over concerns about job losses.
But even if delayed, Toshiba is likely to file for Chapter 11 by April 11, the deadline for submitting its April-December earnings report, which has been put off twice on the grounds that it needs more time to look into an accounting problem at Westinghouse.
Toshiba President Satoshi Tsunakawa said at a news conference earlier in the month that the company is considering bankruptcy protection for Westinghouse as an option.
The conglomerate is reeling from major losses linked to Westinghouse. In February, it said it was expecting a loss of ¥712.5 billion ($6.4 billion) from the nuclear unit for the nine-month period through December on an unaudited basis due to plant project delays leading to cost overruns.
Tsunakawa said that Toshiba will sell a majority stake in Westinghouse in fiscal 2017 to remove it from the group’s books and limit further losses.
But a bankruptcy filing could cause the already huge Westinghouse losses to balloon to around ¥1 trillion because its parent may need to book an additional loss of ¥300 billion in relation to its debt guarantee of ¥700 billion for Westinghouse.
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