An agreement between Toshiba and Western Digital is just days away

They say it is the season to be jolly, and the board of embattled conglomerate Toshiba may finally be smiling after a tumultuous 12 months. After months of legal wrangling, Toshiba’s dispute with Western Digital looks like it is finally reaching an amicable conclusion. According to Reuters, the two parties have agreed to settle the dispute over Toshiba’s $18 billion sale of its chip unit.

Bought up by a consortium led by Bain Capital and Apple, Western Digital’s legal challenge was the main obstacle still in the way of the sale being completed.

The settlement on the table calls for Western Digital to drop arbitration claims seeking to stop the sale in exchange for Toshiba allowing it to invest in a new production line for advanced flash memory chips that is slated to start next year.

Toshiba was forced to put the unit – the world’s no. 2 producer of NAND chips – on the block to cover billions of dollars in liabilities arising from its now bankrupt U.S. nuclear power unit Westinghouse.

As part of the planned settlement, Toshiba and Western Digital would extend existing agreements for their chip joint ventures beyond the current deadline of 2021. Western Digital would also invest in a completely new chip plant that Toshiba will start building next year in northern Japan.

It is welcome good news for Toshiba that has suffered a horrendous year. After seven months of negotiations, lawsuits, twists and turns, Toshiba bosses finally penned an $18 billion deal for its chip unit, paving the way for a consortium led by Bain Capital and Apple to take over its memory unit. The deal looked like it was done some time before but Apple demanded new terms at the last minute sparking doubt that the deal would be complete. The consortium also includes SK Hynix, as well as Dell, Seagate Technology and Kingston Technology. Toshiba took the decision to sell off a number of its valuable assets after its nuclear arm Westinghouse was declared bankrupt after racking up insurmountable debt.

But bosses at Toshiba will now be scrambling to satisfy the March regulatory review, which usually takes six months to complete. Cutting it fine, if the deal does not close before then, Toshiba – hurt by liabilities at is now bankrupt nuclear unit Westinghouse – is likely to end a second consecutive year in negative net worth, putting pressure on the Tokyo Stock Exchange to strip it of its listing status.