TOKYO -- Toshiba is thinking about having U.S. unit Westinghouse Electric file for Chapter 11 bankruptcy protection, a company official said on Friday morning.
The source said the troubled Japanese conglomerate sees this as one option as it reviews its overall nuclear power business.
Toshiba earlier this month disclosed an impairment loss of more than 700 billion yen ($6.2 billion) on its nuclear power operations, mainly from Westinghouse, and that its liabilities exceeded its assets by 191.2 billion yen as of the end of December.
With Toshiba scurrying to cushion the financial pain, its board on Friday resolved to spin off the profitable chip business, the company said. The new entity, to be called Toshiba Memory, will be headed by Senior Vice President Yasuo Naruke -- provided shareholders approve the plan at an emergency meeting scheduled for March 30.
Toshiba's stock was up by 12% at one point Friday morning, at 240.9 yen. The surge came ahead of the board meeting, with investors anticipating that directors would decide to sell a majority stake in the chip operations.
The company's market capitalization temporarily recovered to 1 trillion yen for the first time since it abruptly delayed an earnings announcement on Feb. 14. Some investors likely took the news of the possible Chapter 11 filing by Westinghouse as a sign that further losses will be limited.
On the subject of external capital for the chip spinoff -- including the possible sale of a majority stake -- Toshiba said after the board meeting that it aims to make a decision early in fiscal 2017, which starts in April.
Toshiba shares ended Friday's trading up 4.13% at 223.9 yen.