The move will trigger complex negotiations between the Japanese conglomerate, its U.S. unit and creditors, and could embroil the U.S. and Japanese governments, given the scale of the collapse and U.S. government loan guarantees for new reactors.
A Westinghouse bankruptcy is a “concern” for the administration of U.S. President Donald Trump, which is in touch with the Japanese government on the matter, an administration official told Reuters on Tuesday.
“If several different things happen in a bad way, there’s a potential national security issue here,” the official said.
Among Westinghouse’s biggest creditors are the U.S. utilities that commissioned the two nuclear plants, sources have said.
Investment bank Lazard is working with Toshiba on its liabilities related to Westinghouse, according to people familiar with the matter who could not be named because the hiring has not yet been made public.
The bankruptcy filing will allow Westinghouse to renegotiate or break the construction contracts, although the utilities that own the projects would likely seek damages.
Southern Co, which owns the largest stake in the Vogtle nuclear power project in Georgia, said in a statement it was prepared for any potential outcome and would hold Westinghouse and Toshiba accountable for their responsibilities.
Scana, which is the majority owner of the V.C. Summer nuclear project in South Carolina, did not immediately respond to a request for comment.
Moody’s Japan K.K. on Tuesday welcomed the prospect of bankruptcy for the parent. A Chapter 11 filing “would be credit positive, because this action could limit Toshiba’s contingent liabilities,” the ratings company said, maintaining its Caa1 corporate family rating and senior unsecured debt rating with a negative outlook.
