Toshiba's US nuclear unit Westinghouse has filed for Chapter 11 bankruptcy in a New York court.
The company, which Toshiba bought a controlling stake in in 2006, will seek to restructure because of financial and construction difficulties caused by its AP1000 reactor design.
"We have taken action to put Westinghouse on a path to resolve our AP1000 financial challenges while protecting our core businesses," Interim President Jose Emeterio Gutierrez said in a statement.
"We are focused on developing a plan of reorganization to emerge from Chapter 11 as a stronger company while continuing to be a global nuclear technology leader."
Westinghouse attracted around $800 million in debtor-in-possession financing to get through the bankruptcy, the statement said.
In a separate announcement Toshiba said that the decision would increase the 2016 writedown related to Westinghouse to around $9.1 billion.
Toshiba reportedly informed its creditors last week that Westinghouse would file for bankruptcy.
The problems at the Westinghouse have taken a heavy toll on Toshiba, which bought a 77 percent stake in Westinghouse for $5.4 billion in 2006.
The Japanese behemoth was forced to put its memory chip business up for sale, considered selling Westinghouse and twice delayed reporting its earnings to the Tokyo Stock Exchange, which ran the risk of the conglomerate being delisted.
Westinghouse has not turned a profit since 2013 on the back of the fallout related to the Fukushima nuclear disaster and a series of cost blowouts related to the construction of reactors in the US.
Toshiba warned investors to expect a large one-off loss linked to a 2015 Westinghouse deal to buy the Stone & Webster nuclear construction business.
Last month, Toshiba revealed a $6.3 billion writedown related to the acquisition.
Toshiba later delayed announcing its results to the Tokyo Stock Exchange due to a disagreement with its auditors over the size of the writedown.
The company has been given permission to delay reporting earnings for a second time, with Toshiba's new deadline set for April 11.