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A group of PG&E Corp. noteholders said in a court filing yesterday that they are ready to invest $29.2 billion into the power producer as part of a reorganization plan that will pay off liabilities from wildfires that drove it to bankruptcy, Reuters reported. The proposed plan will create two trusts, a $14.5 billion trust for compensating individual wildfire victims and an $11 billion trust for paying insurers with subrogation claims against PG&E for payments they had made after the blazes in 2017 and last year, according to the filing in the U.S. Bankruptcy Court in San Francisco. The plan will give the noteholders new debt and a controlling equity stake in a reorganized PG&E. The committee representing the wildfire victims in PG&E’s bankruptcy is supporting the noteholders’ group. PG&E, joined by major shareholders, is opposing efforts by the noteholders to be allowed to file their reorganization plan. The company on Sept. 19 outlined its own plan that will pay $17.9 billion for wildfire claims and caps payouts to victims at $8.4 billion and to insurers at $8.5 billion.

A bondholder group’s bid to take control of PG&E Corp. by paying off massive wildfire damage claims threatens to derail the company’s plan for the mega-billion-dollar bankruptcy case as the battle over California utility intensifies, the Wall Street Journal reported. PG&E has a chapter 11 exit plan and backing from major shareholders. Meanwhile, bondholders led by Paul Singer’s Elliott Management Corp. have an exit plan of their own, which is backed by victims of the fires that put the company into bankruptcy. The bondholder plan would damage the company’s shareholders. But the alliance with fire victims in a case that was filed to tackle $30 billion or more in wildfire damages is a political and strategic coup for the bondholders. Bondholders, a group comprising hedge funds, buyout firms and institutional investors, have been in talks for months attempting to rally wide-ranging public support. In early October, Judge Dennis Montali will decide whether to leave PG&E in charge of the proceeding, or open up the field to competition. Read more.(Subscription required.) 

In related news, PG&E Corp. said that it is cutting power to about 21,000 customers in Northern California to keep electrical equipment from sparking a blaze amid dry and windy weather, Bloomberg News reported. Power started being shut off in three counties yesterday, the San Francisco-based company said in a statement. Earlier PG&E said the outage could impact as many as 124,000 customers in nine counties, which would have made it the company’s largest preemptive power shutoff to date. PG&E and other California utilities have been taking more aggressive measures to keep equipment from sparking blazes after fallen power lines ignited a series of catastrophic blazes across the state in 2017 and 2018. One of PG&E’s lines started the deadliest fire in California history in 2018, forcing the company to file for chapter 11. PG&E said the shutoff impacts Butte, Nevada, Yuba counties in the foothills of the Sierra Nevada Mountains. The utility said it’s monitoring conditions in nine counties for today, where it could conduct additional shutoffs. Read more. 

The leader of New York state’s top financial regulatory agency blasted efforts by Purdue Pharma on Monday to pay out $34 million in bonuses to its employees as part of the company’s bankruptcy proceedings, citing the state’s ongoing investigation into the opioid industry, the New York Law Journal reported. New York Department of Financial Services Superintendent Linda Lacewell urged a federal bankruptcy judge in a letter to reject the company’s request, citing the damage done through the country’s opioid crisis. “Every dollar available should be used to recompense victims, and it would be inequitable, to say the very least, if the amount of the estate left to redress the tremendous harm suffered by those victims was diminished because employees were paid large sums upon exceeding expectations in causing that very harm,” Lacewell wrote. The letter was in response to a filing last week from attorneys for Purdue Pharma, which is seeking to pay out $34 million in bonuses for employees who had exceeded their target performance goals. Bankruptcy Judge Robert Drain of the Southern District of New York is expected to consider the request in October.

PG&E Corp. said today that it has formalized an $11 billion settlement with insurance companies over wildfire claims and denounced an alternative bankruptcy plan made last week by bondholders, the Wall Street Journal reported. The deal covers insurance carriers and hedge funds that were seeking compensation from PG&E for payouts insurers made to homeowners and businesses in connection with fires sparked by the utility’s equipment. PG&E announced the settlement agreement in principle earlier this month. Last week, bondholders, including Elliott Management Corp. and the official committee representing fire victims asked to put a chapter 11 plan on the table that would compete with the company’s own restructuring framework. Bondholders must get court permission to formally file a competing chapter 11 plan. The California utility company said today that the Elliott proposal would cost all PG&E customers billions of dollars in additional interest payments over 15 years and provide an “unfair windfall” for noteholders and plaintiffs’ attorneys.

Members of the Sackler family could withdraw their pledge to pay $3 billion as part of a nationwide deal to address the opioid crisis if a bankruptcy judge does not block outstanding state lawsuits against them and their company, Purdue Pharma, Purdue lawyers said in a legal complaint, the New York Times reported. Whether the threat is posturing or real, the move by Purdue, the maker of OxyContin, to inject it into the company’s bankruptcy proceeding could jeopardize the tentative settlement it reached last week with representatives of thousands of local governments that have brought lawsuits against it. Two dozen state attorneys general who have sued the company in their own courts have signed on to the agreement, too. The $3 billion to be paid over seven years, plus another contribution the Sacklers would make with the proceeds of the sale of their British drug company, Mundipharma, is a key component of the deal. But all lawsuits must be resolved, the lawyers said. The new complaint, filed in bankruptcy court in White Plains on Wednesday, is aimed at about two dozen states that have not signed on to the settlement and are continuing to pursue cases against both the company and various Sacklers.

The Roman Catholic Diocese of Rochester was the first in New York to seek bankruptcy protection under the weight of new sexual misconduct lawsuits, but lawyers and church leaders say it may not be the last, the Associated Press reported. All eight of the state's Roman Catholic dioceses face financial pressures as a result of the state's new Child Victims Act, which temporarily set aside the usual statute of limitations for lawsuits to give victims of childhood sexual abuse a year to pursue even decades-old claims. More than 400 cases have been brought against the dioceses since Aug. 14, when the law's one-year "look back" period for such suits began. Representatives from the dioceses of Buffalo, Rockville Centre, Albany and Ogdensburg told the Associated Press that they haven't decided as they consult with legal, financial and insurance experts. Buffalo Bishop Richard Malone has said he is close to deciding whether to file for bankruptcy protection or litigate the nearly 140 new lawsuits his diocese is facing. The Diocese of Albany, meanwhile, faces more than 30 lawsuits so far, but spokeswoman Mary DeTurris Poust said the diocese won't make any decision until "the full financial scope" of the Child Victims Act is known.

Billionaire Ron Burkle gets to move forward in his lawsuit alleging being defrauded in the $289 million sale of The Weinstein Co. assets, according to the Hollywood Reporter. On Thursday, a Los Angeles Superior Court judge rejected a bid to nix fraud claims brought by Burkle's Yucaipa Companies. Back in July 2018, Yucaipa sued Lantern Entertainment (later becoming Spyglass Media) upon completion of the $289 million deal. Burkle once attempted to buy TWC's assets outside of bankruptcy, but certain events intervened. According to the complaint, Yucaipa had taken the lead in assembling a deal that would save TWC from bankruptcy and ensure compensation for Harvey Weinstein's victims and creditors. Instead, ongoing investigations and a suit from New York's attorney general made his buyout nearly impossible. Once TWC filed for chapter 11 in Delaware, a bankruptcy court supervised the sale of film and television assets. Lantern emerged the winner of bidding. But after Lantern was crowned the victor, Burkle's Yucaipa stepped forward to allege it was cheated. Specifically, Yucaipa asserts that behind the scenes, it provided confidential information to Lantern, which at that point had no experience in the entertainment industry.