Toshiba calls in bankruptcy lawyers as it fails to declare earnings for second time

Japanese powerhouse Toshiba is staring down the bankruptcy barrel after failing to declare its earnings.

The multinational conglomerate has reportedly called in bankruptcy lawyers after missing an earnings deadline for a second time, according to Reuters.

CEO Staoshi Tsunakawa confirmed that the firm is ‘actively considering’ selling off its US nuclear unit Westinghouse in an last-ditch attempt to bolster the coffers. 

Industry experts have pointed to the ill-fated purchase of a US nuclear power plant construction company by affiliate company Westinghouse in 2015 as the catalyst for the current financial turmoil at the company.

Professor Loizos Heracleous, of Warwick Business School, said: "The current problems stem from debatable strategic capabilities. Overly complex corporate portfolios, particularly if synergies across businesses are hard to detect, such as Toshiba’s diversified stable of businesses, are unlikely to deliver high returns.” 

He added: "While it is easy to critique transactions post-hoc, it is nevertheless fair to ask what capabilities Toshiba already had in the nuclear business before it decided to acquire nuclear operations based in the US, and why it believed this business would be one of its key growth engines.

“It is also fair to ask why the due diligence prior to the acquisition could not identify the operational, legal, client, and asset valuation issues that now threaten to sink Toshiba.”

The firm has already put most of its prized memory chip business up for sale to cope with an upcoming $6.3 billion (£5.1 billion) loss expected for the nuclear business, and has already announced plans to overhaul the day-to-day running of the company. These proposed changes include improving board level oversight, introducing more internal controls, bolstering its risk management system and tightening its grip on the activities of its affiliates.

Toshiba has officially asked for a further month to declare its already-late third-quarter earnings report. Based in Tokyo, the tech giant could yet be bailed out by the banks as Japanese lenders have previously done to help out struggling native companies. 

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