Georgia Construction, Bond & Lien Law Blog


Plant Vogtle Project Impacted by Westinghouse Bankruptcy

Posted in Bankruptcy Law,Current Legal Issues,Materilamen's Liens by Blue Blog on the April 9th, 2017
Georgia Power's Plant Vogtle affected by the bankruptcy petition file by WesTec and Westinghouse

Plant Votgle in Waynesboro, Burke County, Georgia experiences additional construction delays after the general contractor seeks bankruptcy protection

One of the largest construction projects in Georgia hit another snag last week when the general contractor filed for bankruptcy protection. The project known as Plant Vogtle (Vogtle Electric Generating plant) in Waynesboro, Burke County, Georgia which is near Augusta, Georgia, had already run into numerous cost escalations and delays. Then, on March 29, 2017, the general contractor Westinghouse Electric Company, LLC complicated matters when it filed for Chapter 11. Since the news broke about this issue, it has been a cause for concern among subcontractor and suppliers working on the project.

Where did Westinghouse Electric Company, LLC file it’s Petition for Bankruptcy? The debtor filed its bankruptcy petition in the United States Bankruptcy Court in the Southern District of New York. The case number was assigned 17-10751, and you can find the court’s site by clicking here > >

Are other entities included in Westinghouse’s bankruptcy? Yes, in addition to Westinghouse’s bankruptcy, there is a long list of affiliate entities which are included in the bankruptcy estate. It includes WESTEC Global Project Services, Inc. which was serving as one of the general contractors on the Plant Vogtle project.

Will Subcontractors working on the Plant Vogtle project impacted? It is too early to say; currently, there bankruptcy estate has implemented a brief 30-day non-interruption period so that the project may continue on schedule; this is also to give the various parties and opportunity to decide the fate of the project.  It remains unclear how a creditor’s pre-petition claims and post-petition claims will be treated.

Can I file a Georgia Materialmen’s Lien if I haven’t been paid? Claimants are busy filing materialmen’s lien in an attempt to protect their interest; there are already multiple liens filed against the Plant Vogtle project, and you can be assured that there will be many more.

Where do I file a Lien against the Plant Vogtle Project: All liens in Georgia are filed in the real estate records maintained by the Clerk of the Superior Court in the county where the project is located. In this case, all liens should be filed at the following address or click here for the clerk’s website:

Superior Court Clerk of Burke County
111 East 6th Street
Post Office Box 803
Waynesboro, Georgia 30830
706-554-2279

What is the deadline to file a Claim of Lien against the project? Pursuant to Georgia’s Mechanics and Materialmen’s Lien Act, all liens must be filed either (i) 90 days from the last day in which materials, services or labor were provided or (ii) 60 days from the date of the earliest, unpaid lien waiver whichever is earlier.

Who are the owners of the Plant Vogtle Project? According to the Notice of Commencement filed on the project by Westinghouse and WesTec, there are four owners as follows: Georgia Power Company, the Municipal Electric Authority of Georgia, Oglethorpe Power Corporation, and the Board of Water Light and Sinking Fund, Commissioners of the City of Dalton.

Are there performance and payment bonds covering the Plant Vogtle project? According the Notice of Commencement filed by Westinghouse and WesTec, there are not any payment bonds protecting lower-tiered contractors and suppliers.

ADDITIONAL INFORMATION ABOUT WESTINGHOUSE’S BANKRUPTCY PROCEEDING:

The Westinghouse bankruptcy docket already has a many documents filed; consequently, it has have a lot of useful information for those interested in the proceeding including creditors. For example, the debtors file a Declaration from Lisa J. Donahue who is Managing Director and the Leader of the Global Turnaround and Restructuring Group at AlixPartners LLC and the Debtors’ Chief Transition and Development Officer. The 109 page document provides a background and goals of the debtors.

One of the goals enumerated is found in numbered paragraph 5 which states:

Despite the Debtors’ recent financial troubles, the majority of the Debtors’ businesses—particularly those relating to nuclear fuel and the servicing of nuclear plants—are very profitable. Westinghouse’s uninterrupted supply of these goods and services is necessary for the continuous and safe operation of more than half of the nuclear plants in the world, and particularly those in the United States and Europe. The Debtors will use these chapter 11 cases to reorganize around their profitable Core Businesses and isolate them from the one specific area of their businesses that is losing money: their construction of nuclear power plants in Georgia and South Carolina. The Debtors will use the protections and tools afforded by the Bankruptcy Code to resolve their issues with the U.S. construction projects and reorganize around their Core Businesses to emerge from bankruptcy as a healthy, well-capitalized company capable of continuing Westinghouse’s proud history as an icon of American ingenuity.

Many people are interested in whether or not the project will be completed.  In numbered paragraph 8, the declaration states:

The Debtors will use their chapter 11 cases as the forum to resolve their difficulties that stem from the construction cost increases at Vogtle and VC Summer. Pursuant to short-term agreements with the Owners of Vogtle and VC Summer, the Debtors and the Owners will explore the continued feasibility of those projects in a manner that is cost-neutral and cash-neutral to the Debtors. The ultimate resolution of the Debtors’ involvement in these projects remains uncertain, but the Debtors’ chapter 11 cases will remove the threat that the construction cost increases pose to the Debtors’ ability to operate their Core Businesses.

In addition, the declaration explains the corporate structure relating to the various Westinghouse entities; furthermore, it explores the history of the Plant Vogtle Reactor Project in Waynesboro, Georgia:

Four of Westinghouse’s new-generation AP1000 reactors are being built at the only two new nuclear construction sites currently in the United States—the Allen W. Vogtle Electric Generating Plant near Augusta, Georgia (the “Vogtle Reactors”) and the Virgil C. Summer Nuclear Station near Columbia, South Carolina (the “VC Summer Reactors” and together with the Vogtle Reactors, the “U.S. AP1000 Projects”). Ground was broken for both sites in 2011, with the expectation that the first reactors were expected to come online in mid-2016.

Citing that, due to construction delays, the threat of liquidated damages is a component of Westinghouse’s financial future. For those who are interested, the Declaration includes a list of Critical Vendor List, a list of its largest creditors, and provides such information as current payroll and benefits obligations, taxes, obligations and assets.

There is much to assess for those impacted by the Chapter 11 petition of Westinghouse and its related entities, as well as those work are working on the Plant Vogtle project site. We will endeavor to provide additional information as it become known.

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