Victims counting on PG&E Corp.’s bankruptcy to compensate them for their losses in California wildfires are making a last-ditch effort for court protection against gyrations in the utility’s share price in the virus-infected stock market, Bloomberg News reported. Lawyers for a committee representing the victims want a guarantee that half of their $13.5 billion settlement with the bankrupt utility to be paid in stock is really worth $6.75 billion when they get the shares. Having failed to persuade the judge overseeing PG&E’s bankruptcy to sanction their effort, the lawyers yesterday sought a different federal judge in San Francisco to “carefully word” his valuation of the settlement deal to prevent the victims from being outmaneuvered by PG&E’s attorneys. The judge’s intervention is required “to avoid subjecting the fire victims to a situation in which they obtain devalued stock during the coronavirus market downturn,” the lawyers said in a filing. The epidemic “is causing a devaluation of the PG&E shares intended for the fire victim trust, to a value that is lower than the required $6.75 billion value.” U.S. District Judge James Donato is tasked with confirming that PG&E’s damages to victims amount to $13.5 billion. The company argues in a filing that the committee’s request has no place in Donato’s court, calling it an attempt to “recut the deal that it agreed to” in the bankruptcy case. Besides which, the utility says, it “never agreed that the stock to be deposited into the trust would have a cash value or a market value of $6.75 billion” on the day the bankruptcy plan is effective. PG&E has warned that investors who have pledged to backstop $9 billion in equity may back out of their agreements if the power company changes the terms of its settlement with fire victims.
