Toshiba Corp. is considering having Westinghouse Electric Co. file for bankruptcy under Chapter 11 of the U.S. Bankruptcy Code, among other options, as the U.S. company under Toshiba’s umbrella may accumulate further losses in its nuclear power plant business, The Yomiuri Shimbun newspaper learned Friday.
The huge losses Toshiba is facing are attributed to Westinghouse. Toshiba is considering the option of Chapter 11, which is equivalent to Japan’s Civil Rehabilitation Law, as Westinghouse’s nuclear power plant construction projects will possibly cause more losses, according to sources involved in the matter.
Toshiba, currently in the process of financial restructuring, likely aims to use such a measure to eliminate this kind of future risk.
However, Toshiba is closely examining the possible impact of utilizing the U.S. code. Some within the company have called for caution on this scenario, the sources said.
Westinghouse is undertaking the construction of a total of eight nuclear reactors in the United States and China. If the construction work for these reactors remains behind schedule, the company may continue to suffer losses.
However, if Westinghouse withdraws from the current projects after filing for Chapter 11 bankruptcy, Toshiba will possibly have to take responsibility as the parent company by paying a huge amount of compensation, the sources said.
Toshiba Corp.’s chairman resigned this month after the company logged such massive losses in its nuclear business that it must sell its lucrative computer-chip business to avoid going belly-up.
The company projected a 712.5 billion yen ($6.3 billion) loss for its nuclear business related to the acquisition of CB&I Stone & Webster by its U.S. nuclear unit Westinghouse. The company also said it will not take on new projects to construct nuclear plants.
Charlotte is home to some of the Toshiba’s nuclear-related businesses. In 2015, Toshiba formed a new company called Toshiba America Energy Systems Corp., headquartered in Charlotte and led by CEO Ali Azad, that combined parts of three existing units, including a Westinghouse Electric Co. nuclear power business.
The Associated Press and the Observer contributed
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