Insurers offer competing plan to rescue PG&E from bankruptcy
SAN FRANCISCO (AP) — Insurance companies that say Pacific Gas & Electric owes them more than $20 billion from wildfire claims wants to take over the California utility and pull it out of bankruptcy.
The group of insurers filed court documents Tuesday seeking to end PG&E’s exclusive right to file a reorganization plan. They want the right to submit their own plan to wildfire victims and to other PG&E creditors.
Their request came on the eve of a hearing Wednesday, where a federal bankruptcy judge is expected to consider a competing request by a group of PG&E bondholders for the right to submit a restructuring plan.
PG&E filed for bankruptcy in January to deal with an estimated $30 billion in liabilities from wildfires that its equipment may have ignited in 2017 and 2018, including a wildfire last November that essentially wiped out the Northern California town of Paradise and killed 85 people.
The insurers say the utility owes them reimbursement for about $20 billion in wildfire loss claims. Under their plan, many of their claims against PG&E would be converted into new stock, giving them a sizeable share of the company’s stock holdings and allowing them to establish what they termed a “well-funded” trust for wildfire victims.
The insurers said their plan provides “a viable path” toward PG&E emerging from bankruptcy. They argued the utility has made little progress in settling claims and that other stakeholders should be allowed to present their own.
PG&E has until Sept. 26 to submit its plan and is resisting the attempts to end its exclusive rights.
In a statement Tuesday, the utility said it has made “significant progress in developing a viable, fair and comprehensive plan of reorganization that will compensate wildfire victims, protect customer rates, and put PG&E on a path to be the energy company our customers need and deserve.”
Allowing the insurers to submit their plan ahead of PG&E’s proposal “would increase the potential for a long, drawn-out bankruptcy process and create unnecessary delay,” the company added.
The bondholders requesting court permission to offer their own reorganization plan include some of the biggest investors on Wall Street.
They are seeking to invest more than $30 billion, which would give them a majority stake in the company. The bondholders said they would set aside at least $16 billion of their investment into a trust to pay claims arising from the 2017 and 2018 wildfires.
The stakes surrounding PG&E’s bankruptcy exit plan intensified after Gov. Gavin Newsom signed a law on July 12 that requires major utilities to spend at least $5 billion on safety improvements and creates a fund of up to $21 billion to help pay out future wildfire victims. The fund is intended to financially stabilize the state’s three largest investor-owned utilities: PG&E, Southern California Edison and San Diego Gas & Electric.
The law says PG&E can’t access the financing mechanism unless it gets out of bankruptcy by the end of June 2020.