Bankrupt utility giant PG&E Corp. is trying to offer $13.5 billion in compensation to the victims of wildfires sparked by its power lines as part of a restructuring plan, Bloomberg News reported. In doing so, the San Francisco-based power company would be providing the same amount that a group of its creditors — led by Pacific Investment Management Co. and Elliott Management Corp. — has agreed to pay victims in a rival reorganization proposal. The two sides are at odds, however, over how to structure the payout and how much should come in the form of cash and stock. PG&E has spent months trying to come up with a restructuring plan that would get it out of the biggest utility bankruptcy in U.S. history by the middle of next year. The utility went bankrupt in January after its equipment was found to have started a series of catastrophic wildfires in 2017 and 2018, burying it in an estimated $30 billion worth of liabilities. Read more.
In related news, California Gov. Gavin Newsom questioned PG&E Corp.’s $11 billion settlement proposal for insurance losses tied to wildfires and said it could derail the utility’s bankruptcy exit strategy, WSJ Pro Bankruptcy reported. In a court filing on Saturday, the Democratic governor raised several objections to the proposed deal with insurance creditors after it emerged as a sticking point in negotiations to resolve PG&E’s massive debts and wildfire liabilities. If the company can’t resolve an impasse over the insurance settlement and line up wide support for an exit from chapter 11, Newsom’s lawyers said the state government “will present its own plan” to resolve the bankruptcy. His threat marked the second time in less than a month that he has raised the possibility of taking PG&E’s exit strategy out of management’s hands. After years of disastrous wildfires linked to PG&E equipment, the company sought court protection in January and is attempting to cobble together an agreement on how it can tackle billions of dollars of death, injury and property damage claims. Closed-door talks aimed at creating a bankruptcy plan with broad creditor support are under way. Fire victims said in court papers that the insurance settlement is impeding those talks because it would tie up too much of PG&E’s cash. The insurance proposal is scheduled for discussion on Wednesday in the U.S. Bankruptcy Court in San Francisco. Read more.
