Gavin Newsom asks for timeout in PG&E takeover fight war. CA bankruptcy judge agrees
With a feeding frenzy heating up, Gov. Gavin Newsom persuaded a bankruptcy judge Wednesday to postpone the bidding war for PG&E Corp. so state officials can sort out competing proposals.
Bankruptcy Judge Dennis Montali, at a hearing in San Francisco, put off for two weeks a decision on whether to allow PG&E’s major bondholders to submit their $30 billion plan to seize control of the company.
Lawyers for the state Public Utilities Commission, acting on Newsom’s behalf, and the utility itself asked Montali for the delay in an email late Tuesday, arguing that it was necessary to help the company and the Public Utilities Commission consider the competing offers “and determine the most appropriate plan.”
The request came hours after another bid arrived from a collection of major insurance companies, which have been paying claims to wildfire victims and are demanding billions in compensation from the utility.
The emergence of the insurers’ plan means at least three groups will be fighting over future control of PG&E: the insurers, the bondholders and the company, which is expected to outline its proposal later this summer.
The company, which filed for Chapter 11 bankruptcy protection in January, would normally have the exclusive right to offer the first plan for paying off its debts and reorganize its battered finances. First the bondholders, and now the insurers, have been seeking permission to pre-empt PG&E and push their proposals first.
Because it’s a utility, the reorganization would need the approval of the Public Utilities commission. The two-week timeout creates “the best opportunity for the CPUC to consider the benefits to ratepayers of all the proposals,” commission spokeswoman Terrie Prosper said.
Whichever plan succeeds, PG&E must reorganize its finances and emerge from bankruptcy by next June in order to participate in a $21 billion wildfire insurance fund created by the Legislature in AB 1054. The fund will help PG&E and other major utilities pay for claims arising from future wildfires.
Any reorganization plan will have to deal with the liabilities spawned by the wine country wildfires of 2017 and last November’s devastating Camp Fire — a sum estimated at $30 billion by PG&E when it sought bankruptcy protection.
The bondholders have offered $16 billion to $18 billion to pay wildfire claims as part of a deal that would give the bondholders at least 85 percent of PG&E’s stock. The insurers haven’t said how much they’d offer wildfire victims. PG&E has yet to offer its plan, but is reportedly offering about $14 billion for the 2017-18 wildfire liabilities.
This story was originally published July 24, 2019 at 1:18 PM with the headline "Gavin Newsom asks for timeout in PG&E takeover fight war. CA bankruptcy judge agrees."