Western Digital’s restraining order against Toshiba was stayed on Tuesday, with the California Court of Appeal overruling the temporary measure granted to the San Jose-based tech giant by the Superior Court of California earlier in July. Following the decision, the Japanese conglomerate continued preventing Western Digital from accessing data pertaining to their joint venture that Toshiba is currently trying to sell to the highest bidder in an effort to recover from its recent financial troubles. Western Digital previously argued that any such sale cannot be cleared without its consent given how the chip unit in question was partially funded and managed by the U.S. company. Western Digital is now looking to appeal the decision with a brief, arguing that the competent court suspended the original restraining order based solely on Toshiba’s own brief, without considering the opposition filing from SanDisk.
The latest turn of events may be a setback for Western Digital’s efforts to win a permanent injunction against Toshiba and prevent the company from selling its flagship division without coming to an agreement on the matter with its joint venture partner. Recent developments are also likely to further strain the already tense relationship between the two firms that started deteriorating after Toshiba’s nuclear business in the United States filed for bankruptcy earlier this year, prompting the Japan-based tech giant to liquidate one of its most profitable assets in an effort to balance its books and avoid being delisted from Tokyo’s stock market. The company is still officially looking for a buyer and Western Digital itself was said to be interested in acquiring the joint venture, albeit at a discounted rate compared to what some industry watchers believe Toshiba could get for the unit. According to previous estimates, the sale of the company’s chipmaking division could raise up to $18 billion, depending on the exact buyer and structure of the transaction.
The Superior Court of California is set to hold the next hearing on the dispute between Western Digital and Toshiba next Friday, July 28. The same judicial body previously proposed a more peaceful solution, suggesting that Toshiba provides Western Digital with a two-week notice of sale. It’s currently unclear to what degree could this ordeal affect Toshiba’s efforts to sell its chip division, though some of its investors are already growing impatient, recent reports indicate.