Westinghouse seeks protection under Chapter 11

Westinghouse Electric Co., the U.S. nuclear unit of Japan’s Toshiba Corp., filed for bankruptcy protection Wednesday, calling into question the future of a number of billion-dollar nuclear projects under construction, including two in the U.S.

Westinghouse said that it filed the Chapter 11 petition in U.S. Bankruptcy Court in New York. The move had been largely expected. The troubles at a company long associated with nuclear power add to the industry’s problems. Nuclear power is cleaner than generating electricity with coal or natural gas, but building a nuclear reactor is much more complex and prohibitively costly. After the March 2011 nuclear disaster in Fukushima, public sentiment turned against nuclear power in countries including Japan and Germany. In the U.S., nuclear power still generates about one-fifth of the nation’s electricity. But some older nuclear plants are being shuttered and the four nuclear reactors Westinghouse is helping to build in South Carolina and Georgia are behind schedule and billions of dollars over budget.

Westinghouse said Wednesday that it obtained financing to maintain its operations and made arrangements to continue work on the projects in South Carolina and Georgia while it assesses their viability. Westinghouse also said it will continue projects in China, and that its operations in its Asia and Europe, the Middle East and Africa aren’t affected by the filing.

Toshiba acquired Westinghouse in 2006 with much fanfare, making nuclear power an important part of its business strategy. Instead, Westinghouse has saddled the Japanese company with mounting losses. Toshiba said Westinghouse had racked up debt of $9.8 billion. Wednesday, Toshiba said it could post a loss as big as $9 billion for the fiscal year ending March 31. It previously said Westinghouse lost $6.2 billion from April to December of last year.

Toshiba reiterated its view that at the root of the problem was the acquisition of U.S. nuclear construction company CB&I Stone and Webster.

Auditors questioned Toshiba’s latest reporting on the acquisition of CB&I Stone & Webster after a whistle-blower, an employee at Westinghouse, wrote a letter to the Westinghouse president.

The company’s reputation has also been tarnished by a scandal over the doctoring of accounting books to meet unrealistic profit targets.

Satoshi Ogasawara, who has written a book about Toshiba’s systematically falsifying financial results, says executives knew of the problems for years but kept procrastinating, hoping against hope that things would get better and they would be able to avoid blame. But things just got worse.

Toshiba has said it will no longer take on new reactor construction projects and will focus on maintaining the reactors it already has. But it is also involved in the decommissioning of the Fukushima Dai-ichi nuclear plant, which suffered meltdowns after the March 2011 tsunami.