The largest utility in the U.S., Pacific Gas & Electric Corp., filed for bankruptcy Tuesday as it braces to be hit with billions of dollars in potential lawsuit damages from the deadly California wildfires.
The utility company filed documents in a U.S. court seeking Chapter 11 reorganization on Tuesday citing hundreds of lawsuits from victims of the November Camp fire and others.
The official cause of the Camp fire - the deadliest in the state's history which claimed 86 lives and razed 15,000 homes in Paradise - has not been determined but speculation is rife that PG&E, which had reported power line problems in the weeks before it started, may be to blame.
In its Chapter 11 filing, the company listed assets of $71.39 billion and liabilities of $51.69 billion.
It has insisted that normal service for its 16million customers across the country wil continue.
PG&E is facing at least four separate lawsuits including a class action suit over the Camp fire which could cripple the business.
Now, those plaintiff will have to grapple with the company's creditors and will receive less money if their suits are successful.
The Camp fire in Paradise claimed 86 lives in November and destroyed 15,000 homes. PG&E has filed for bankruptcy in anticipation of liability it may be responsible for once an investigation into the cause of the blaze is complete
In conjunction with the filing, it asked for a bank bailout of $5.5 billion to tide its operations over while the lawsuits play out in court.
That financing, known as a debtor-in-possession financing, will be given by J.P. Morgan, Bank of America, Barclays, Citi, BNP Paribas, Credit Suisse, Goldman Sachs, MUFG Union Bank and Wells Fargo if approved. It will be decided on later this week.
As the news emerged on Tuesday morning, the utility company's shares plummeted in pre-market trading by about five percent.
Disappointed shareholders who had urged the company to avoid seeking a Chapter 11 spoke furiously of the decision, calling it 'reckless' and 'irresponsible.'
They urged the company to wait until investigations into the cause of the fire were complete to move ahead and took a recent finding that PG&E was not to blame for a separate 2017 fire as hope that it may not be found liable for the much deadlier, 2018 blazes.
The company had been facing $30million in damages from the 2017 fire but was found not to be liable earlier this month.
In as statement on the company's website on Tuesday interim CEO John R. Simon said: 'Throughout this process, we are fully committed to enhancing our wildfire safety efforts, as well as helping restoration and rebuilding efforts across the communities impacted by the devastating Northern California wildfires.
'To be clear, we have heard the calls for change and we are determined to take action throughout this process to build the energy system our customers want and deserve.'
The bankruptcy filing immediately puts a halt to the wildfire lawsuits and consolidates them in bankruptcy court, where legal experts say victims will likely receive less money.
Wildfire victims have little chance of getting punitive damages or taking their claims to a jury in a bankruptcy proceeding.
Instead, they will have to tussle with PG&E's creditors, including bondholders, for a payout from the company.
Consumer activist Erin Brockovich, who famously took on PG&E in the 1990s, had urged California lawmakers not to let the utility go bankrupt because it could mean less money for wildfire victims.
The Camp fire claimed 86 lives and razed 15,000 homes in November this year. Above is the aftermath of the deadly blaze
The utility company, which is the largest in the US, listed assets of $71billion and liabilities of more than $51billion on Tuesday in its Chapter 11 filing
Protesters attended a California Public Utilities Commission meeting in San Francisco on Monday to beg regulators not to bail the utility company out
Legal experts say the bankruptcy will likely take years to resolve and will result in higher rates for PG&E customers.
The company provides natural gas and electric service to 16 million people over a 70,000-square-mile area in Northern and central California.
A bankruptcy filing would not affect electricity or natural gas service but allow for an 'orderly, fair and expeditious resolution' of potential liabilities from the wildfires, the company has said on its website.
PG&E said it was committed to helping those affected by the wildfires and could not speculate on any changes to customers' bills, noting that the California Public Utilities Commission sets electric and gas rates.
The utility also filed for bankruptcy in April 2001 near the height of an electricity debacle marked by rolling blackouts and the manipulation of the energy market.
PG&E emerged from bankruptcy three years later but obtained billions of dollars in higher payments from ratepayers.
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https://hienalouca.com/2019/01/29/pge-files-for-bankruptcy-amid-wildfire-lawsuits/
Main photo article The largest utility in the U.S., Pacific Gas & Electric Corp., filed for bankruptcy Tuesday as it braces to be hit with billions of dollars in potential lawsuit damages from the deadly California wildfires.
The utility company filed documents in a U.S. court seeking Chapter 11 ...
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Dianne Reeves US News HienaLouca
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