New PG&E Bankruptcy Plan

Earlier this month, we wrote about the utility company PG&E’s proposed bankruptcy plan, which capped compensation to wildfire victims. This week, a new plan has been proposed, which would allocate much more funds to the fire victims.

The initial plan, submitted to the northern district of California as part of bankruptcy proceedings, sought to cap wildfire payments at $16.9 billion. Many claimed that this figure fell drastically short of what was actually needed. PG&E’s electrical equipment has been implicated in multiple California wildfires over the past decade. It is believed that the company was aware of malfunctioning equipment which ultimately caused the 2018 Camp Fire, the deadliest wildfire in California history which covered 240 square miles, destroyed over 18,000 structures, and killed 85 people. The damage of this fire was estimated to be around $16 billion. PG&E is also facing a lawsuit from victims of the Tubbs Fire, a 2017 Northern California wildfire that claimed 22 lives and caused billions of dollars in damage. 

The new PG&E bankruptcy plan was announced this week, put forth by a coalition of Wall Street hedge funds and wildfire victims. This group will propose a new plan to rescue PG&E from bankruptcy; the plan includes more than $24 billion for fire victims and insurers that covered their losses.

As part of the plan, the two groups said they would honor PG&E’s $11 billion settlement with insurers and provide more than $13 billion to settle other wildfire claims. The plan would go well beyond the previous cap PG&E proposed for fire claims in its bankruptcy plan. A representative for a group of bondholders made the announcement during a status conference.

The group proposed a previous plan, which PG&E dismissed as a self-serving attempt to seize control of the company. When bondholders and fire victims proposed the first version of their joint plan last week, a PG&E spokesman denounced it as “an attempt to pay” bondholders “more than they are entitled to under the law.”

An attorney representing victims of the wildfire stated that PG&E has not been communicating whatsoever with the victims. She stated the utility company has held “zero meetings” with the victims and never sought input from the victims when constructing potential bankruptcy plans.

PG&E issued a statement after the most recent plan was put forth at Tuesday’s hearing. The company again denounced the effort, stating that the group has yet to propose a plan that does not “unjustly enrich themselves” at the expense of PG&E customers.

A hearing on the two groups’ motion to terminate PG&E’s exclusive right to propose its own bankruptcy plan will take place on October 7.