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PG&E Corp. wants authority to tap hot corporate debt markets for about $11 billion in financing even as courtroom arguments continue about the company’s bankruptcy exit plan, WSJ Pro Bankruptcy reported. At a court hearing yesterday, the judge presiding over PG&E’s bankruptcy said that he was open to signing such an order if PG&E can get official creditors’ representatives to go along with the move. The financing would help pave PG&E’s path out of bankruptcy, providing money to pay people, businesses and insurers for damages stemming from several wildfires that swept California in 2017 and 2018. To exit bankruptcy, PG&E needs confirmation from Judge Dennis Montali in the U.S. Bankruptcy Court in San Francisco and financing to put the restructuring plan into effect. Conditions in the debt markets are so favorable that California’s largest utility is prepared to take a chance on raising the money even before the confirmation ruling, PG&E lawyer Stephen Karotkin said.

California-based power provider PG&E Corp. said today that it plans to raise $5.75 billion from public offerings as it tries to emerge from chapter 11 protection by the end of this month, Reuters reported. Separately, the company said investors, including Appaloosa and Third Point, have agreed to purchase up to $3.25 billion of its stock once the company exits bankruptcy. PG&E said that up to $1.25 billion of its common stock offering is expected to be reserved for large shareholders, while up to 25 percent will be allocated to individual investors. The private placement will be at a maximum price of $10.50 per share, a discount of over 16 percent to the stock’s last close. Read more. 

In related news, PG&E Corp. is readying an $11 billion debt-financing package that may be sold to investors as soon as this week as the company prepares to exit bankruptcy, Bloomberg News reported. The financing includes $4 billion of high-yield bonds and a $750 million term loan led by JPMorgan Chase & Co. The remaining package consists of an investment-grade bond portion offered by Bank of America Corp., JPMorgan and other banks. The exit financing marks the near-conclusion of a complex chapter 11 protection that’s lasted over a year and seen wildfire victims fight for compensation. The utility company filed for relief from its creditors in January 2019 after its equipment was linked to wildfires that ripped through Northern California in 2017 and 2018. Bankers are targeting a timeline of next week for the debt offering, the people said, adding that PG&E is expected to market a $9 billion equity offering at a later date. The company has said in court papers that it expects to market the debt as soon as it gets confirmation of its plan, which could come as early as this week. Read more. 

PG&E Corp. heads into a third and final day of court fights today, with concerns a last-minute protest from fire victims could upend plans by the utility to raise $9 billion in fresh capital to get it out of bankruptcy, WSJ Pro Bankruptcy reported. Demands for an examiner to probe the voting process are before U.S. Bankruptcy Judge Dennis Montali, who must rule on PG&E’s chapter 11 plan. If he grants the request, investors that PG&E is counting on to provide bankruptcy exit financing will be rattled, Stephen Karotkin, lawyer for PG&E, warned yesterday. Judge Montali is expected to wrap up confirmation hearings on PG&E’s $59 billion bankruptcy exit plan today, and rule shortly. The plan is an effort to address damages from years of wildfires linked to its equipment, and PG&E is trying to hit a June 30 deadline to qualify to participate in a new California utility wildfire fund. The call for an examiner comes from a splinter group of victims of the fires that pushed California’s largest utility into chapter 11 protection last year. They say that tens of millions of victims were left out of the polling process on PG&E’s chapter 11 plan, and an examiner needs to conduct an investigation to figure out why.

The U.S. Supreme Court let the liquidator of Bernard Madoff’s investment firm press ahead with efforts to recoup $3 billion from European banks and other overseas investors, Bloomberg News reported. The justices, without comment yesterday, turned away an appeal by investors led by HSBC Holdings Plc who said trustee Irving Picard was impermissibly trying to apply U.S. bankruptcy law to foreign transactions. A federal appeals court let Picard sue the investors. The case affects foreign customers of Fairfield Greenwich Group and other offshore feeder funds that channeled investors’ money to Bernard L. Madoff Investment Securities LLC. The investors include Koch Industries, whose chairman and chief executive officer, Charles Koch, is a major Republican patron. The investors allegedly withdrew more money than they put in before Madoff’s Ponzi scheme collapsed in 2008. The money is the biggest remaining bucket of cash being sought by Picard as he tries to compensate customers who lost $19 billion in principal after Madoff’s arrest. So far Picard has recovered more than $14 billion and distributed more than $13 billion to victims — significantly more than many predicted when he was appointed in 2008.

A class-action lawsuit filed on Friday is accusing the Trump administration of illegally seizing student loan borrowers' tax refunds even after Congress halted government debt collection amid the coronavirus pandemic, The Hill reported. The lawsuit filed in federal court in Washington by the groups Student Defense and Democracy Forward accuses Treasury Secretary Steven Mnuchin and Education Secretary Betsy DeVos of defying Congress's mandate and seizing money that student loan defaulters desperately need. The lawsuit was filed on behalf of Kori Cole, a Colorado woman whose family tax refund of nearly $7,000 was seized in April to go towards her defaulted student loans. The Department of Education can request that the Department of Treasury offset tax refunds for those who owe money on their student loans, and the federal government has agreements with most states that allow them to offset state tax refunds as well. But under the CARES Act signed into law in March, the Treasury Department was forbidden from conducting any involuntary debt collection until September, including seizing any tax refunds. In March, after President Trump declared a national emergency over the pandemic, DeVos ordered a halt to tax refund offsets and for $1.8 billion that had been seized from borrowers to be returned. It's not entirely clear how many student loan borrowers are still having their refunds offset, but the lawsuit cites a statistic on the Treasury Department's website that appears to show that it has collected $18.8 million from about 11,000 tax refunds since April 1.

The judge overseeing the Boy Scouts of America’s bankruptcy said law firm Sidley Austin LLP can hold on to the job of advising the youth organization over the protests of a former client that is one of the Boys Scouts’ liability insurers, WSJ Pro Bankruptcy reported. The decision from Bankruptcy Judge Laurie Selber Silverstein marks a victory for Sidley and the Boy Scouts, which argued that forcing them to hire new bankruptcy advisers would unsettle their efforts to restructure. The dispute stems from Sidley’s years representing Century Indemnity Co., an insurer that wrote policies covering liability claims against the Boy Scouts. The Boy Scouts hired Sidley in the fall of 2018, seeking advice on how to deal with hundreds of claims of sexual abuse of children at the hands of Scout volunteers. Sidley dropped Century as a client shortly before it guided the Boy Scouts into chapter 11 protection in February. A subsidiary of Chubb, Century protested the law firm’s request to steer the bankruptcy, accusing Sidley of a conflict of interest. The Boy Scouts are counting on insurers including Century to put up money to cover sexual-abuse claims, putting them at odds with the organization. With many American companies considering chapter 11 as a refuge to endure the coronavirus pandemic, law firms are staffing up their restructuring practices. Friday’s ruling concerns the road map for large firms like Sidley that have multiple areas of practice and large client rosters to steer around conflict rules when advising troubled companies. Judge Silverstein said that Sidley’s decision in January to cut ties with its insurance company client kept the law firm in line with bankruptcy rules on conflicts of interest. “Chubb contends that my approval of Sidley’s retention will encourage law firms to impermissibly drop clients in order to take on more lucrative bankruptcy work,” Judge Silverstein said, adding that she didn’t believe that would happen.

As U.S. businesses reopen after weeks of pandemic lockdowns, many have been posting coronavirus disclaimers or requiring employees and patrons to sign waivers before entering, Reuters reported. From hair salons and recreation centers to stock exchanges and wedding photographers, the notices have sprung up across the country, asking guests to acknowledge they might contract a disease that has so far killed over 100,000 Americans. Companies are using signs, forms and website postings as a shield against lawsuits, but the measures do not prevent people from seeking damages due to negligence, the same way someone might sue after falling on a slippery floor or getting sick from walls covered in lead paint, experts said. Lawyers said it would be tough to prove that a business caused a customer’s illness, but concerns are so intense that a waiver may soon become the new normal. Entities including the YMCA of Greater Oklahoma City, a real estate agency in Arizona, a racecar speedway in Seinsgrove, Pennsylvania, and the New York Stock Exchange have introduced waivers disavowing responsibility for anyone who might contract the disease onsite, Reuters has learned.

PG&E Corp. said yesterday that its chapter 11 reorganization plan has been confirmed by a California power regulator, bringing the power provider one step closer to emerge from bankruptcy and participate in a state-backed wildfire fund, Reuters reported. The decision by the California Public Utilities Commission (CPUC) also approved the company’s request to issue new debt and securities to finance its exit from bankruptcy, PG&E said in a statement. The San Francisco-based utility had filed for chapter 11 bankruptcy protection in January last year, citing potential liabilities exceeding $30 billion from major wildfires sparked by its equipment in 2017 and 2018. The company needs to exit bankruptcy by June 30 to participate in a state-backed wildfire fund that would help reduce the threat to utilities from wildfires. The power provider has had a tumultuous phase since the filing, with CPUC having asked the company in April for governance and oversight changes to its reorganization plan. Governor Gavin Newsom too had previously raised concerns about the plan.

The Diocese of St. Cloud (Minn.) will pay $22.5 million to sexual abuse survivors and declare bankruptcy under the terms of a settlement agreement announced yesterday, the Minneapolis Star Tribune reported. The agreement, subject to a bankruptcy court filing expected in the next few weeks, addresses allegations made against 41 priests by some 70 survivors dating back to the 1950s. Many of the clerics are now dead, though one was still in active ministry as recently as 2015 at St. Andrew’s Catholic Church in Elk River. Attorney Jeff Anderson, who negotiated the settlement agreement on behalf of abuse survivors, said it amounts to “validation and affirmation” for those survivors, some of whom Anderson first represented in lawsuits filed in the 1980s. In 2014, the St. Cloud Diocese released the names of 33 priests who had been credibly accused of sexual abuse. New lawsuits and information boosted that number to 41. The diocese announced in 2018 that it would file for bankruptcy, beginning the negotiations that led to yesterday’s announcement. The agreement also calls for the diocese to turn over its files on the 41 credibly accused priests.

Nearly 90 percent of California wildfire victims who voted on PG&E Corp.’s plan to pay them and restructure its finances have accepted the proposal, but the company’s problems are far from over, the San Francisco Chronicle reported. PG&E must now steer its $57.65 billion restructuring plan through a pivotal month-long period that will determine whether its blueprint to exit bankruptcy succeeds — and how fire victims are ultimately paid. PG&E needs to get its plan to exit bankruptcy approved in court and by state regulators by June 30 to access a $21 billion fund to pay claims from victims of future major wildfires. In the coming days, the company is expected to face two major steps toward that goal: Regulators at the California Public Utilities Commission will weigh whether to approve the plan, and a confirmation trial should start in U.S. Bankruptcy Court. “It’s all coming together,” said Jared Ellias, a UC Hastings law professor who has been following the case. But the outcome is not guaranteed. Attorneys for various creditors have filed many objections to the company’s bankruptcy plan, and some important elements of the case remain unresolved. Also, if PG&E fails to meet the June deadline, it could be forced to put itself up for sale, according to the terms of a deal the company previously reached with Gov. Gavin Newsom. And some wildfire victims who object to the way PG&E intends to pay them still want changes to the deal, while other critics of the company have said its bankruptcy plan falls far short. As it races to wrap up the case, PG&E also faces the looming specter of the 2020 wildfire season, which could prove highly dangerous because of the relatively meager amounts of rain and snow that fell this winter. The company desperately needs to avoid causing more catastrophic wildfires like the ones it started in 2015, 2017 and 2018, all of which prompted it to file for bankruptcy protection last year.