Pacific Gas & Electric is Advocating a federal bankruptcy judge to approve an Integral insurance Reimbursement as it struggles to Pay at least 20 billion in losses stemming from catastrophic wildfires in California
Pacific Gas & Electric on Wednesday urged a federal bankruptcy judge to approve an integral insurance settlement as it struggles to regain its financial footing and pay at least 20 billion in losses stemming from catastrophic wildfires in California tied to its gear.
The country’s largest utility faced fierce opposition in the court hearing from lawyers representing tens of thousands of wildfire victims, PG&E bondholders who have suggested an alternate plan for salvaging the hobbled firm and California Gov. Gavin Newsom.
The opposition argued that PG&E’s $11 billion settlement using a group representing roughly 110 insurers who have already paid claims in the fires threatens to shortchange uninsured and underinsured victims. Critics also say the deal would give the company an unfair advantage to gain support for its deeply flawed reorganization plan.
Nancy Mitchell, an attorney, told U.S. Bankruptcy Judge Dennis Montali that PG&E’s latest rehabilitation plan does not meet the criteria necessary to take part in a wildfire fund approved by California lawmakers last summer. Nevertheless, Mitchell contended PG&E is expecting approval of the insurance settlement will give it the leverage to pressure voting stakeholders to approve its plan, which should happen by June 30 for its utility if it expects to get future wildfire losses partly covered by the nation’s new finance.
“They want to lock up the votes and then want to say, ‘OK, state, you have no choice’’” but to approve the strategy, Mitchell said. Apart from getting Montali’s blessing, PG&E’s plan also needs to be accepted by its chief regulator, the California Public Utilities Commission.
PG&E attorney Stephen Karotkin tried to guarantee Montali the insurance settlement is the best way to treat all of the parties affected by the San Francisco firm’s 10-month-old bankruptcy situation.
“We don’t want to take the risk that this thing blows up,” Karotkin stated.
The two PG&E and insurance companies have framed a settlement reached in September as a wonderful deal since the $11 billion payment represents about 55 percent of the sum the carriers could seek if they resisted the usefulness for the damages caused by its equipment and practices.i Insurers have paid out almost $16 billion of the approximately $20 billion they expect to pay in the fires linked to PG&E.
“If this deal goes away, we are back to the drawing board,” said Matthew Feldman, a lawyer for the insurers involved in the PG&E settlement.
The insurers have set a Friday deadline for obtaining court approval of their PG&E settlement, although Feldman advised Montali that date could be extended if the judge had more time to issue a judgment. Montali said he would attempt to issue a decision immediately.
PG&E’s proposed all-cash payment to the insurers has increased fears that the company will not have anywhere near enough money to pay the rest of the claims which have poured in from over 70,000 sufferers in fires that erupted during the autumns of 2017 and 2018, killing more than 120 individuals and destroying nearly 28,000 houses and buildings.
Lawyers for the fire victims are concerned they could end up being forced to accept stock in a fiscally rehabilitated PG&E that could prove to be dreadful investment.
Although it did not appear in Wednesday’s hearing, Newsom was pressing PG&E to revise its strategy to book $13.5 billion to pay fire victims beyond those included in the $11 billion settlement, fitting the amount earmarked in the bondholders’ competing proposal. PG&E’s plan now calls for the sufferers getting an extra $7.5 billion, not including government agencies with claims.
Newsom might have gained more bargaining leverage with the recent launch of an exhaustive report in the California Public Utilities Commission that concluded PG&E repeatedly failed to keep a power line blamed for sparking a 2018 fire which nearly wiped out the town of Paradise.
Though a state wildfire bureau had held PG&E accountable for that deadly blaze, the broader findings from the utility’s Key regulator could provide Newsom with more fodder to follow through on current threats to mount a bid to turn the utility into a nonprofit cooperative owned by its clients
Media reports that PG&E was nearing an agreement to fulfill Newsom’s requirements caused the firm’s stock to spike 11percent Wednesday to close at $9. 47. That remains far below a high of $71. 57 in September 2017, reached just before the first of the main wildfires erupted and started raising doubts about PG&E’s future.