TOSHIBA is consulting with lawyers about what the impact of its US nuclear division filing for Chapter 11 bankruptcy would be, according to reports from Japan.

The Reuters news agency has reported that the firm - which has a 60 per cent in NuGen, the company with plans to build a nuclear power plant at Moorside, near Sellafield - has asked a Japanese law firm to investigate what the financial implications of such a move would be, quoting two unnamed sources from the company.

Chapter 11 bankruptcy gives a company in financial difficulties protection from its creditors for a limited period to allow it to reorganise.

The report repeated suggestion made last week that the firm was looking into this course of action for its US subsidiary Westinghouse Electric, which would build the three reactors for the proposed Cumbrian new nuclear plant.

Toshiba though has maintained that it is "not aware" the division taking this action.

A spokeswoman for Toshiba said: “Toshiba is not aware of any intention that Westinghouse commence Chapter 11 of Title 11 of the United States Bankruptcy Code at this moment."

Toshiba has forecast a 713bn yen (£5bn) loss in its nuclear business and its woes stem mainly from Westinghouse. It is estimated that filing for Chapter 11 could see this cut to 300bn yen (£2.2bn).

In January the company announced this subsidiary may have overpaid - by several billion dollars - for another nuclear construction and services business.

This led the company to the review of its involvement in non-Japanese nuclear projects - including Moorside - and put its semiconductor business up for sale. It subsequently announced that it remained committed to the Cumbrian development but the company's financial situation has fuelled fears over its involvement.

The company's lawyers are also investigating "inappropriate pressure" by Westinghouse's managers in relation to the purchase of the other nuclear business.