Toshiba Corp.’s business partners are preparing for a scenario in which the company seeks to reorganize under Japanese bankruptcy laws, with consequences for the global nuclear-power and electronics industries, The Wall Street Journal reported today. Toshiba last month expressed “substantial doubt” about its “ability to continue as a going concern.” The company said that it expected to record a net loss of some ¥1 trillion ($8.83 billion) for the year ended March 2017 following the chapter 11 filing by Toshiba’s U.S. nuclear unit, Westinghouse Electric Co. Atlanta-based utility Southern Co., which hired Westinghouse to build two nuclear reactors in Georgia, is concerned that Toshiba will apply for protection from creditors and relieve itself of the guarantees made on Westinghouse’s behalf, said people familiar with Southern’s thinking. Toshiba says it doesn’t plan to. Southern Chief Executive Thomas A. Fanning said that the utility is owed $3.7 billion by Toshiba and wants to be paid whether or not the reactors are built. The company has said that it guaranteed some $6 billion in obligations incurred by Westinghouse when it promised to complete the reactors. A Japanese chapter 11-style filing is only one of several scenarios Toshiba could choose. It presents several downsides: Suppliers could take a hit, hurting the broader economy, and shareholders could be wiped out — though Toshiba’s shares are already in danger of being delisted in Tokyo because of accounting problems that emerged in 2015. But the filing would strengthen Toshiba’s balance sheet and could allow it to keep its profitable memory-chip business — relieving Japanese government concerns about technology leaks to Chinese or other competitors.
