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Toshiba is looking at a potential Chapter 11 filing as one of
several options for Westinghouse as a means to limit future
losses from the Pittsburgh-based company, the two sources said.
The sources declined to be identified as they were not
authorized to speak to the media.
Last week, responding to media reports on a potential Chapter 11
filing, Toshiba said it was not aware Westinghouse was
considering the step.
A spokesman on Wednesday said the company had no immediate
comment on whether a law firm had been approached about the
matter.
The TVs-to-construction conglomerate has been plunged into
crisis after it emerged that cost overruns at two U.S. nuclear
power plant construction projects would result in a $6.3 billion
writedown - forcing it to put a majority stake in its prized
chips business up for sale.
Analysts and sources with knowledge of the matter have
previously said that even under a Chapter 11 filing, Toshiba
could still be on the hook for up to $7 billion in contingent
liabilities as it has guaranteed Westinghouse's contractual
commitments - an arrangement typical for the nuclear industry.
Toshiba dispatched a group of experts, including lawyers, to
Westinghouse in mid-February to assess the U.S. unit's assets,
the two sources said.
Preliminary estimates from that group show a Westinghouse
bankruptcy filing would result in Toshiba having to take a fresh
charge of at least 300 billion yen ($2.6 billion), the sources
said.
That figure is narrower in scope than the $7 billion Toshiba has
in contingent liabilities, as it does not include damages that
Westinghouse's customers may seek from Toshiba, including
damages that the owners of the two projects could claim if they
were not completed.
A Chapter 11 filing would still yield benefits, however, as
Westinghouse would come off Toshiba's consolidated accounts.
That could offset some of the charge, the sources said.
(Reporting by Taro Fuse additional reporting by Taiga Uranaka;
writing by Makiko Yamazaki; editing by Jason Neely)
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