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California power producer PG&E Corp. said yesterday that it has filed for an amended reorganization plan, adding that it remains on track to getting the plan confirmed before a June 2020 deadline to exit bankruptcy, Reuters reported. The development comes less than a week after the company said it reached a $13.5 billion settlement with victims of some of the most devastating wildfires in California’s modern history. PG&E has settled all major wildfire claims and resolved disputed release provisions between insurance companies and wildfire victims, it said yesterday. The company also said that its plan can be fully funded through its capital structure, including the $12 billion equity backstop commitments that PG&E received last week. Read more. 

In related news, Elliott Management Corp. is digging in against a PG&E Corp. shareholder strategy for ending the utility’s bankruptcy, saying key demands of California officials wouldn’t be satisfied under the proposal, WSJ Pro Bankruptcy reported. The hedge-fund manager, part of a group of bondholders seeking to take over PG&E, said yesterday that a restructuring strategy developed by shareholders, management and victims of PG&E-linked wildfires would jeopardize “both the immediate-term and long-term health of the company and its critical infrastructure.” The bondholders are fighting to keep their chapter 11 takeover proposal viable after wildfire victims that had previously backed it reached a $13.5 billion settlement with PG&E and switched to supporting the rival shareholder-backed strategy. By settling with fire victims, PG&E built critical creditor support for its proposal, which would protect the ownership stakes of large shareholders such as Knighthead Capital Management LLC and Abrams Capital Management LP. Read more.

A lawyer for one of the women who brought lawsuits accusing Harvey Weinstein of sexual misconduct said yesterday that a proposed $25 million settlement for most of the Hollywood producer’s alleged victims was unfair and designed to pressure her into accepting it, Reuters reported. Thomas Giuffra, who represents actress Alexandra Canosa, said after a hearing in Manhattan federal court that the accord set aside just $500,000 for his client, and that the money could be used to pay for Weinstein’s legal defense if she did not accept it. Weinstein has been accused of sexual misconduct dating back decades by more than 70 women, which helped spark the #MeToo movement. He has said any sexual encounters were consensual.

Global automakers may face another potentially huge air-bag recall as the U.S. transport regulator evaluates the long-term safety of inflators made by bankrupt supplier Takata Corp., Bloomberg News reported. The manufacturer, now owned by China’s Ningbo Joyson Electronic Corp., faces a Dec. 31 deadline to show the U.S. National Highway Traffic Safety Administration that as many as 100 million inflators containing a chemical drying agent will be safe long-term. Those would be on top of the previous round of recalls, which started in 2008 and is linked to at least 23 deaths worldwide and more than 200 injuries in the U.S. alone. Takata had sold defective air bag inflators using ammonium nitrate, which were at risk of exploding violently in a crash and injuring passengers with metal shards. The Japanese parts maker pleaded guilty to a wire-fraud charge as part of a $1 billion settlement with the U.S. Justice Department over the air-bag problems, and later went out of business.

Bondholders and other creditors struggled to persuade a federal judge to force PG&E Corp. to pay them “hundreds of millions of dollars” more in interest than the bankrupt utility has proposed, Bloomberg News reported. Bankruptcy Judge Dennis Montali appeared to side with PG&E in a court hearing yesterday in which the company and the bondholders argued over what interest rate creditors should earn during the bankruptcy. Montali repeatedly asked creditor lawyers why a ruling by a federal appeals court in a similar case that forced investors to accept the so-called federal judgment rate doesn’t apply. “I realize we’re talking about a lot of money,” Montali said in dismissing a bondholder argument that a Texas court should set the legal precedent instead of a decision by the Ninth Circuit Court of Appeals in California. “They don’t like the Ninth Circuit in Texas. We have to periodically straighten them out.” Montali didn’t immediately rule on the request by bondholders and other creditors. California federal courts have long held that creditors can only collect the federal judgment rate of interest while a company is in bankruptcy. The bondholders want to collect the higher rates listed in their debt contracts. Texas federal courts have allowed the higher rates. PG&E filed bankruptcy in January in San Francisco. At the time, the federal judgment rate was 2.59 percent, which is what creditors would get paid while the company remains under court protection should Judge Montali side with PG&E. Read more. 

In related news, an analysis by researchers at Georgia Tech found that sustained power outages caused by electric-wire failures in Northern California could double or even quadruple in years to come unless PG&E Corp. steps up its replacement of aging equipment, the Wall Street Journal reported. PG&E’s current rate of electric-line replacement falls far short of what’s needed to prevent a surge of failures due to the effects of aging, according to the researchers. The analysis suggests the current focus on upgrading distribution lines in areas of extreme fire risk fails to solve a more basic problem of age-related deterioration, especially in coastal areas where gear often ages faster. If electric-wire replacement continues at the rate currently proposed by the utility, PG&E customers should expect a doubling of sustained power outages in 15 years and a fourfold increase in 30 years, according to the analysis by the National Electric Testing, Research and Applications Center at Georgia Tech, which did the analysis for PG&E last year. Read more. (Subscription required.) 

After months of wrangling, infighting and uncertainty, a controversial $47-million settlement was reached between Harvey Weinstein, his former film studio’s board and several women who have accused the disgraced movie mogul of sexual misconduct, according to attorneys involved in the negotiations, the Los Angeles Times reported. A U.S. Bankruptcy Court judge in Delaware still must formally approve a deal that would bring an end to one chapter of the scandal that rocked the entertainment industry, decimated the Weinstein Co. and propelled #MeToo into a global movement. The tentative settlement does not, however, resolve a separate criminal case against Weinstein in New York over multiple accusations of sexual assault. That criminal case will go to trial next month. Under terms of the deal, about $25 million will be allocated to the accusers, another $7.3 million to unsecured creditors and former Weinstein Co. employees, and about $12.2 million will be earmarked to pay legal fees of the studio’s directors and officers, according to a copy of the settlement term sheet.

The fate of PG&E Corp.’s $13.5 billion deal to resolve wildfire claims as part of its bankruptcy case lies most immediately in the hands of California Gov. Gavin Newsom (D), the San Francisco Chronicle reported. By Friday, Newsom must decide if the agreement with victims’ attorneys PG&E announced one week earlier complies with a new state wildfire law he championed, according to terms the company disclosed on Monday. If the governor approves it, the PG&E parent company and subsidiary Pacific Gas and Electric Co. will be on track to clear the most central hurdle in their bankruptcy, though complications could still arise. If Newsom doesn’t sign off, PG&E’s agreement will automatically terminate — unless the company can amend it to his liking. Newsom has not yet made a decision about whether the agreement complies with California Assembly Bill 1054, the state law he backed that creates a fund PG&E could tap to protect itself from future fire costs. In order to access the fund, PG&E has to resolve its bankruptcy by June 30.

PG&E Corp. disclosed in a securities filing yesterday that it expects to take a fourth-quarter charge of $4.9 billion in connection with a new $13.5 billion deal to settle claims from wildfire victims, the Wall Street Journal reported. The new charge, which PG&E expects to take by year’s end, would raise the company’s total recorded fire-related charges to over $25 billion. The higher amount reflects the increase over the $8.4 billion PG&E initially offered to resolve wildfire victim claims, which stem from more than a dozen fires linked to the company’s equipment in recent years. The victims settlement agreement unveiled Friday would remove a substantial roadblock to PG&E’s emergence from bankruptcy, even as it puts additional strain on its balance sheet. PG&E shares were up more than 18 percent yesterday following news of the deal.

California’s bankrupt power producer PG&E Corp. said on Friday that it had reached a $13.5 billion settlement with victims of some of the most devastating wildfires in the state’s modern history, Reuters reported. The agreement helps smooth the way for the beleaguered company to emerge from bankruptcy. It filed for chapter 11 protection in January, citing potential liabilities in excess of $30 billion from wildfires in 2017 and 2018 linked to its equipment. State fire investigators in May determined that PG&E transmission lines caused the deadliest and most destructive wildfire on record in California, the wind-driven Camp Fire that killed 85 people in and around the town of Paradise last year. They likewise concluded that PG&E power lines had sparked a separate flurry of wildfires that swept California’s wine country north of San Francisco Bay in 2017. The agreed settlement is subject to a number of conditions and requires confirmation by the United States Bankruptcy Court, the company said. It faces a tight deadline as it needs to exit bankruptcy by June 30, 2020 to participate in a state-backed wildfire fund that would help reduce the threat to utilities from wildfires.

Embattled drugmaker Mallinckrodt PLC, one of the nation’s largest opioid producers, failed to win approval of a $700 million debt swap, WSJ Pro Bankruptcy reported. The company said on Friday that only a small group of bondholders agreed to extend debt due within months by a deadline this week, leaving the opioid manufacturer with more than $600 million in notes due in April. The drugmaker is among the manufacturers, including Purdue Pharma LP, accused by states, counties and municipalities of helping to cause a public health crisis by promoting and distributing opioid products. The company has denied the allegations. Still, Mallinckrodt warned last month that it may have to file for bankruptcy because of liabilities tied to the opioid crisis. Earlier this week, executives told investors that in addition to the pending debt maturities, the company could face another cash demand because of a pricing dispute tied to its Acthar Gel with the Centers for Medicare and Medicaid Services.

More than 110 Northern California city and county officials representing the majority of bankrupt PG&E Corp.’s customers are proposing to turn the utility giant into a customer-owned cooperative, Bloomberg News reported. The coalition led by the city of San Jose includes officials from 58 cities and 10 counties who altogether represent more than 8 million residents, according to a statement from San Jose Mayor Sam Liccardo. The group is proposing, among other things, to continue managing PG&E’s expansive territory as a single system, honor existing power and labor contracts and have a board overseeing the co-op set customer rates. “With these principles, we’ve presented a framework for a viable customer-owned PG&E that will be transparent, accountable, and equitable,” said Liccardo, who has spent weeks getting local officials behind the idea of a cooperative. He didn’t detail how the governments would finance a takeover, but a consultant for the group said bonds would be issued to cover much of the cost. Calls for a takeover of San Francisco-based PG&E have intensified since the company filed for bankruptcy in January amid billions of dollars in liabilities tied to wildfires that its equipment ignited. The latest proposal comes as PG&E’s shareholders and creditors are jostling over control of the state’s largest utility in bankruptcy court.