The Yomiuri Shimbun Toshiba Corp. may suffer a loss of nearly ¥1 trillion if its U.S. subsidiary, Westinghouse Electric Co., applies for Chapter 11 of the U.S. Bankruptcy Code, it was learned Saturday.
Toshiba has been shaken by problems that will likely result in a significant loss, and it is considering applying for the legal procedure, which is equivalent to Japan’s Civil Rehabilitation Law, for Westinghouse.
If Westinghouse withdraws from the construction of nuclear power plants in the United States, Toshiba’s loss may increase further. However, if Toshiba can keep Westinghouse afloat and continue construction of nuclear power plants, it is unclear how much Toshiba’s loss will expand.
To finalize its losses from the nuclear energy business, Toshiba is considering applying for the U.S. Bankruptcy Code for Westinghouse.
It is estimated that Toshiba will report a loss of ¥712.5 billion in its consolidated earnings result from April to December 2016. This was incurred because Westinghouse’s construction of nuclear power plants in the United States was delayed, thereby inflating labor costs and other expenses.
If Westinghouse applies for the Bankruptcy Code and clears its debts, Toshiba is expected to be able to reduce the loss to a certain degree.
However, as the parent company of Westinghouse, Toshiba will have to pay compensation and other costs to electric power companies that ordered the construction of nuclear power plants.
If Westinghouse withdraws from the construction, Toshiba will be required to pay about ¥700 billion in compensation.
Calculations therefore indicate that if Westinghouse applies for the Bankruptcy Code, Toshiba’s loss will increase by between ¥260 billion and ¥300 billion from the current estimate of ¥712.5 billion.Speech