Reuters reports that Westinghouse Electric, the US nuclear power plant developer owned by struggling Japanese electronics giant Toshiba Corp, has brought in bankruptcy lawyers from Weil Gotshal & Manges LLP.
The move comes after a $6.3 billion write down at Westinghouse in February wiped out Toshiba's shareholder equity and caused it to seek divestments to create a buffer for any fresh financial problems.
This has led to speculation that Westinghouse is about to make a Chapter 11 bankruptcy filing, which could help limit Toshiba's losses. However no public decision about a bankruptcy filing had yet been taken.
A Westinghouse spokeswoman declined to comment on Weil's role, but said that Westinghouse has hired Lisa Donahue of advisory firm AlixPartners LLP as its chief transition and development officer, to lead ‘an operational restructuring and financial rebuilding.’
Toshiba stated that it is not aware of any intention by Westinghouse to file for Chapter 11 protection, but it is known that it recently asked a Japanese law firm to help estimate the potential financial impact it would face if Westinghouse filed for Chapter 11 bankruptcy.
Westinghouse is overseeing the construction of four nuclear power plants in South Carolina and Georgia, the first to be built in the USA in more than 30 years, but the projects, owned by US utility companies Scana Corp and Georgia Power Co, respectively, have been beset by cost overruns and delays.
Meanwhile Toshiba has delayed publishing its financial results for the second time in a few weeks. Greenpeace, which has a generally anti-nuclear stance, warned that the Westinghouse meltdown would likely have consequences outside the USA.
Kate Blagojevic, head of Energy at Greenpeace UK, commented: “Toshiba has announced that it will sail past another deadline for publishing its results. The $6.3 billion dollar losses on its nuclear division are causing meltdown for the once mighty corporation. Bankruptcy protection in the USA might shield Toshiba from Westinghouse’s ‘radioactive liabilities,’ but it is expected to pull out of the UK’s NuGen Moorside project. The French joint owner of Moorside, Engie, is also getting restless and rumoured to want out."
"The UK government’s energy policy relies on new nuclear, but how far will they go to prop up Moorside? And how much money will they commit when every nuclear project to date in Europe and the USA has gone massively over time and over budget?”