Westinghouse Electric Company filed for Chapter 11 Bankruptcy on March 29, 2017. Toshiba is the parent company of Westinghouse. The bankruptcy is intended to help Westinghouse continue operations and restructure itself in the wake of costly problems at two AP1000 power plants in Georgia. These nuclear power plants are years behind schedule.
Chapter 11 bankruptcy is specifically for businesses. It allows businesses to create a repayment plan to pay back their debts over time. The goal is to get the business solvent and prevent it from shutting down.
Westinghouse’s bankruptcy had been in the works for months prior to filing. Reportedly, Georgia utility regulators tasked with overseeing the construction of the two AP1000 nuclear power plants are asking for a full account of how long the project owners have been helping Westinghouse prepare to file for bankruptcy.
“This is a fairly big and consequential deal. You’ve had some power companies and big utilities run into financial trouble, but this kind of thing hasn’t happened,” said Richard Nephew, a senior research scholar at the Center on Global Energy Policy at Columbia University.
In a New York Times article, Diane Cardwell and Jonathan Soble discuss the factors that may have contributed to Westinghouse Electric’s need for bankruptcy protection. Cardwell and Soble point to the following:
- A “disastrous deal” on construction business that was intended to be cost-effective, but instead far surpassed original estimates.
- Parent company Toshiba was widely criticized for overpaying in its acquisition of Westinghouse Electric.
- Nuclear power is costly and technically challenging to develop. The economic rationales in favor of nuclear power are far less compelling since the prices of natural gas, and alternative energy sources like wind and solar power have dropped, and there is a lower demand for electricity.
- The 2011 earthquake that devastated Japan and led to the nuclear disaster at the Fukushima Daiichi plant renewed worries about the safety of nuclear power.
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Many factors contribute to a company needing to file for bankruptcy. This is also true for individuals. It is rarely just one thing, or one event, that leads to the need for bankruptcy protection. Often it is a series of unfortunate or unforeseeable events, often beyond a person’s control, that necessitates the need for bankruptcy protection.
Filing for bankruptcy can help you gain financial freedom and may very well help you make today the first day of the rest of your life. Read about how Bankruptcy Stops Collection Action and follow us on Facebook for tips on money management and getting out of debt.
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