With the hope to ring fence losses ahead of the end of its financial year, Toshiba Corp’s U.S nuclear unit could file for Chapter 11 protection from creditors as early as Tuesday, reported news agency Reuters citing a source with direct knowledge of the matter.
But it remains to be seen that whether the complex bankruptcy filing can be achieved this week as this process threatens to involve both the Japanese and U.S. governments.
Toshiba had informed its main banks that it was planning a March 31 filing for Westinghouse – the center of its multibillion dollar crisis, separate sources with knowledge of the matter said last Friday, reported Reuters.
“A March 28 filing is one proposal. The thinking is that it would great if we could pull that off but whether it goes that well or not, is another issue,” the source with direct knowledge reportedly told Reuters.
As they were not authorized to speak publicly about the matter, the sources declined to be identified. It was premature to comment on a potential bankruptcy, said Toshiba reiterating a previous statement.
Missing the deadlines to file earnings that have put it at risk of a delisting, considering a sale of a majority stake in the U.S. nuclear unit and putting up of its prized memory chip unit for sale are the results of the financial debacle as Westinghouse has been plagued by huge cost overruns and has caused financial maelstrom in Toshiba.
Toshiba will seek approval for the sale of the chip unit at the next shareholder meeting scheduled for Thursday.
a filing on the same day or directly before or after will increase the chances of contentious shareholder gathering even though a Chapter 11 filing for Westinghouse would be done by the U.S. unit’s board and would not require approval by Toshiba’s shareholders.
A financial source with knowledge of the matter said that this is that reason that Toshiba’s main banks would prefer the Chapter 11 filing not come before the shareholder meeting.
Sources have said that from a publicly flagged 712.5 billion yen estimate, a Chapter 11 filing for Westinghouse is set to increase charges related to the unit to 1 trillion yen ($9 billion).
The TVs-to-construction conglomerate wants to prioritize limiting the risk of future losses at two U.S. nuclear projects in Georgia and South Carolina even as that would be a much bigger-than-expected hit in the short-term.
The Virgil C. Summer Nuclear Generating Station in Fairfield County, South Carolina and the Vogtle Electric Generating Plant in Burke County, Georgia are the power plants that are being built by Westinghouse. Georgia Power leads a consortium that commissioned the Georgia plants and Scana Corp and Santee Cooper own the plants in South Carolina.
Sources have said that owed the work that has yet to be completed and potential penalties, and the utility companies would be among the largest creditors of the developer in any Westinghouse bankruptcy.
To sponsor its Westinghouse bankruptcy reorganization, Toshiba has asked South Korea’s Korea Electric Power Corp (KEPCO), the Nikkei business daily reported on Monday.
No request had been made, a Seoul-based KEPCO spokesman has said.
(Adapted from Reuters)