Tokyo, March 29 (IANS) The board of directors of Toshiba on Wednesday approved plans for its nuclear unit, the US-based Westinghouse Electric, to file for bankruptcy in order to limit the impact of its serious financial crisis, media reports said
The Tokyo-based company is, however, yet to make an official statement.
The board approved the measure to allow its subsidiary to benefit from US regulations protection, according to economic daily Nikkei and the Kyodo news agency.
Following the reports, shares of Toshiba Corporation climbed two per cent after the mid-session break at the Tokyo Stock Exchange, reversing the downtrend with which it began the day, Efe news reported.
Once Westinghouse Electric applies to Chapter 11 of the US Bankruptcy Act, it may initiate the process of reorganising its debt, which in turn will limit a part of the negative balance that parent company Toshiba will include in its accounts.
Heavy losses incurred by Westinghouse Electric due to the devaluation of its American business have forced Toshiba to begin a restructuring process that could include the divestiture and sale of its flash memory unit, one of its most profitable units.
The financial crisis also led to Toshiba delaying until April 11 the presentation of its results for the period October to December 2016, which estimates that its nuclear branch registered a loss of $6.2 billion.
The impending declaration of bankruptcy, however, will not prevent the general results of Toshiba - which owns 87 per cent of the shares of the US company - from falling in red in the current fiscal year, according to Japanese analysts.