USEC Inc. (USU), which uses scrapped atomic weapons to make enriched uranium for nuclear power plants, was challenged by a bankruptcy judge over its attempt to reorganize as demand for the fuel slumps.
The Bethesda, Maryland-based company, which buys some of its uranium under contract from Russia, yesterday sought Chapter 11 protection from creditors listing $70 million in assets and $1.07 billion in debt.
U.S. Bankruptcy Judge Christopher Sontchi said today that USEC has no financial projections and falling sales because of an oversupply of enriched uranium, raising the question of why it would bother to reorganize its balance sheet in bankruptcy.
“What’s the point?” Sontchi asked D.J. Baker, a lawyer for USEC, at a hearing in Wilmington, Delaware. A reorganization might only “keep the company on life support for the next six to 10 years,” Sontchi said.
The explanation is “a very difficult thing to go into,” Baker said, adding that it might generate “adverse commentary” similar to that surrounding another bankrupt government-supported company, solar-panel maker Solyndra LLC.
Baker said he will provide further details on why USEC should continue to build a $3 billion, state-of-the-art uranium processor in future hearings.
The glut of nuclear fuel resulted from a tsunami that damaged Japan’s Fukushima reactors in 2011 and led to reactor shutdowns in Japan and Germany, USEC said in court papers.
USEC fell 5 percent to $4.18 at 2:59 p.m. in New York trading. The shares earlier jumped as much as 8.6 percent from an intraday low of $4.05. They plunged 21 percent yesterday.
The case is In re USEC Inc., 14-bk-10475, U.S. Bankruptcy Court, District of Delaware (Wilmington).