United States Nuclear Regulatory Commission - Protecting People and the Environment

Information Notice No. 93-100: Reporting Requirements for Bankruptcy

                                 UNITED STATES
                         NUCLEAR REGULATORY COMMISSION
               OFFICE OF NUCLEAR MATERIAL SAFETY AND SAFEGUARDS
                            WASHINGTON, D.C.  20555

                               December 22, 1993


NRC INFORMATION NOTICE 93-100:  REPORTING REQUIREMENTS FOR BANKRUPTCY


Addressees

All U.S. Nuclear Regulatory Commission licensees.

Purpose

NRC is issuing this information notice to alert addressees to the failure of
some licensees to notify NRC when they filed for bankruptcy.  It is expected
that recipients will review the information for applicability to their
facilities and consider actions, as appropriate, to avoid similar problems. 
However, suggestions contained in this information notice are not new NRC
requirements; therefore, no specific action nor written response is required. 

Description of Circumstances

On August 6, 1993, management at an NRC-licensed hospital announced that it
had filed for bankruptcy and would be discontinuing operations at the close of
business that day.  The announcement came to the attention of NRC regional
staff who contacted the hospital.  Two NRC inspectors traveled to the facility
to observe the disposition of licensed material.  All radioactive material was
transferred to another NRC-licensed hospital, except for radioactive waste
stored at the hospital for decay.  A former supervisor agreed to return to the
hospital at the appropriate time to properly dispose of the waste.  NRC staff
coordinated with the court-appointed trustee before the hospital's license was
terminated.

Regulations in 10 CFR 30.34(h), 40.41(f), 50.54(cc), 70.32(a)(9), and
72.44(b)(6) require each licensee to notify the appropriate NRC Regional
Administrator, in writing, immediately following the filing of a voluntary or
involuntary petition for bankruptcy under any chapter of Title 11 (Bankruptcy)
of the United States Code.  In the incident described above, the radioactive
material was controlled, but there have been cases where unlicensed trustees
and creditors have taken possession of items without knowing that they
contained radioactive material or being aware of the safety and regulatory
requirements associated with the material.  These parties typically requested
assistance after they discovered that they possessed radioactive material.  To
date, no serious injuries have resulted from these incidents.  Licensees who
failed to notify NRC claimed that they were unaware of the requirement or
overlooked the requirement because of other demands created by the bankruptcy.




9312160093.

                                                      IN 93-100  
                                                      December 22, 1993
                                                      Page 2 of 2


Discussion:

The purpose of the bankruptcy notification requirement is to allow NRC to
verify the safe disposition of radioactive material possessed by the bankrupt
licensee.  Trustees or creditors taking possession of radioactive material can
create a substantial safety hazard if the material is handled without the
proper safety precautions, or transferred to unauthorized recipients.  NRC
regulations require each licensee to notify NRC of a petition for bankruptcy
filed by or against (1) the licensee, (2) an entity controlling the licensee
or listing the licensee/license as property of an estate, or (3) an affiliate
of the licensee.  The terms "affiliate" and "entity" are defined in 11 U.S.C.
101(2) and 101(14), respectively.  The notification must indicate the
bankruptcy court in which the petition is filed, and the date of the filing.

In addition to the potential safety hazards, failure to notify NRC and
maintain control of licensed material could lead to enforcement actions at a
time when a licensee is already experiencing financial difficulty.  Licensees
may wish to share this information notice with financial or legal staff in
their organization.

This information notice requires no specific action nor written response.  If
you have any questions about the information in this notice, please contact
the technical contact listed below, or the appropriate regional office.


                                          /s/'d by Carl J. Paperiello

                                          Carl J. Paperiello, Director
                                          Division of Industrial and
                                            Medical Nuclear Safety
                                          Office of Nuclear Material Safety
                                            and Safeguards


Technical contact:  Kevin M. Ramsey, NMSS
                    (301) 504-2534

Attachments:
1.  List of Recently Issued NMSS Information Notices
2.  List of Recently Issued NRC Information Notices
.
Page Last Reviewed/Updated Tuesday, November 12, 2013