The massive Pacific Gas and Electric Co. bankruptcy approached its most controversial juncture yet yesterday when attorneys debated how the case should treat victims of a 2017 Wine Country wildfire the state says was not started by the utility’s power lines, the San Francisco Chronicle reported. California investigators said in January that PG&E was not responsible for the Tubbs Fire, which destroyed more than 5,600 buildings and killed about two dozen people in the Santa Rosa area. But lawyers for fire victims vehemently disagree with the state’s conclusion, and they now want U.S. Bankruptcy Judge Dennis Montali to let them try their case before a jury in state court. PG&E opposes that request and has asked Montali to instead move forward with estimating all of the company’s wildfire liabilities through the bankruptcy process. The company does not accept any blame for the Tubbs Fire, which was the most destructive blaze of its kind in state history until a PG&E tower broke 13 months later and started the Camp Fire. No matter which court ultimately tackles the question of whether PG&E is responsible for the Tubbs Fire, the answer could have a multibillion-dollar impact. If a judge or jury decides the company is responsible, it would make the company’s exit from chapter 11 protection far more costly. Read more.
In related news, hedge funds including Olympus Peak Asset Management LP and Whitebox Advisors LLC are buying up claims vendors have filed against PG&E, aiming to cash in, Bloomberg News reported. In many cases, vendors are recouping around 90 cents on every dollar PG&E owes them. But they’re paid quickly, without having to wait for the bankruptcy process to wrap up. The hedge funds, which can afford to wait, profit on the difference between the amount they pay the vendors and the money they will eventually get from the utility. Already vendors have sold off claims against PG&E worth a total of about $470 million. The company, whose service territory covers more than 40 percent of the state, filed for chapter 11 in January facing an estimated $30 billion in liabilities from a string of deadly wildfires that, in some cases, were blamed on its equipment. PG&E listed a total of $51.7 billion in debt. As of Monday, about 325 PG&E claim sales had been recorded with the bankruptcy court. Whitebox bought more than 100, and Olympus Peak scooped up 25. Read more.
