Pacific Gas and Electric Fire Victim Payout Part of Bankruptcy Negotiation

Pacific Gas and Electric fire victims have been offered a $13.5 billion payout as part of a plan to restructure the bankrupt utility company, the Los Angeles Times reports.

The utility company’s equipment purportedly sparked a series of catastrophic wildfires in 2017 and 2018, resulting an estimated $30 billion in liabilities. The Pacific Gas and Electric fire victim compensation offer was set to the same amount offered by a creditor group proposing a rival reorganization plan.

According to the LA Times, the creditors—among whom are Pacific Investment Management Company and Elliot Management Corporation and others—are in private negotiation with Pacific Gas and Electric Company and appear to be at a stalemate. Difficulties reportedly include how to structure and resolve the Pacific Gas and Electric fire victim payout between stock and cash resources.

The utility company has been engaged in this negotiation for several months, as indicated in the Los Angeles Times article, in an attempt to resolve its bankrupt status by the middle of 2020. The bankruptcy protection they were forced to seek is the largest one involving a utility in U.S. history.

A Controversy with Utility Insurers

According to the Denver Post, Pacific Gas and Electric has previously agreed to pay an aggregate of insurance companies representing claims from the equipment-sparked wildfires around $11 billion. The insurance companies had desired to secure $20 billion in bankruptcy court, but the $11 billion was an improvement over the original offering by the utility company.

The $11 billion deal while already established–pending approval in bankruptcy court—has been at the center of significant controversy as the timeline of negotiations between fire victims and Pacific Gas and Electric drag on. A number of fire victims, according to the Los Angeles Times, have filed a lawsuit claiming their rights to get paid prior to the associated insurance companies.

Regardless of who gets paid when the total package when the $11 billion was offered was actually $20.5 billion. An additional $8.4 billion was offered to pay claims from uninsured people affected by the fires and $1 billion was offered to local municipalities financially victimized by the wildfires.

The State Governor Threatens to Reshape Pacific Gas and Electric

As indicated by a November New York Times article, California Governor Gavin Newsom has threatened a “public takeover” of Pacific Gas and Electric if necessary in order to transform the company and advance safety transformations. The State and the utility have received a lot of criticism regarding the rolling blackouts brought into play this year to prevent wildfires.

While the ultimate desire is to have things resolved in court in a timely process, the governor has indicated that he intends to prepare a state backup plan where a takeover is within the realm of possibility. His first line of attack, according to the New York Times, however, will be to appoint an “energy czar” to help guide the utility giant through the bankruptcy process.

This article is not legal advice. It is presented
for informational purposes only.