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Toshiba bankruptcy crisis looms for US subsidiary Westinghouse

A  Toshiba bankruptcy is on the immediate horizon for its nuclear power business in America.

Westinghouse, Toshiba’s nuclear unit in the U.S, could face bankruptcy as soon as March 28.

Tomorrow’s filing is one aspect of possible damage control that the Japanese multinational conglomerate is facing.

Toshiba is an international source for solutions from computing to integrated industry services. It’s only just recovering from a recent accounting scandal in 2015.

It appears as if Toshiba’s financial reputation is in the limelight again with its U.S subsidiary likely to file for Chapter 11 tomorrow.

What caused the Toshiba bankruptcy?

Massive cost overruns have created financial turbulence for Westinghouse, which is in the process of building two nuclear plants in South Carolina and Georgia.

In 2006 Toshiba came into possession of a majority interest in Westinghouse. However, in February it had to write down $6bn (roughly £4.7bn) due complications involving the plants.

This write-down throws Toshiba’s involvement in nuclear power plant construction into disarray. In light of this grievous financial development, former Chairman Shigenori Shiga resigned in order to take managerial responsibility of the Westinghouse gaffe.

Pundits are confident that the global firm is facing a full year loss.

Additionally, Toshiba’s nuclear solutions bring in close to one third of its revenue. With production delays and cost overruns in its U.S nuclear plants, the multi-billion losses could bled Toshiba into financial uncertainty.

Apart from Westinghouse filing for Chapter 11, leadership issues in the U.S are also being called into question. Specifically, that inefficiencies in management may at the core of the Toshiba bankruptcy.

As such, Westinghouse’s Chairman Danny Roderick is like to step down. He is accused of asserting pressure on the accounting department in light of the plants’ complications.

Brought to light by a whistleblower from the company, Toshiba hired a law firm to investigate the inappropriate behaviour. The verdict seems grim in that those interviewed relayed conflicting stories.

At present, it seems as if the survival plan left to Toshiba is to sell its lucrative memory chip business. Its NAND chip unit ranks second to that Samsung’s in scale, and it speculated to be worth $17bn (about £13.5bn).

However, speculation ensues as to whether its chip solution will solve its ailing financial health.