PG&E Plans To File For Bankruptcy Over Possible Liability In California Wildfires

PG&E chief executive leaving as utility readies for possible bankruptcy

PG&E was downgraded to junk by credit-ratings firms last week as reports circulated that it was nearing a bankruptcy filing.

In the press release sent out regarding the bankruptcy, PG&E also stated that it "remains committed to assisting the communities affected by wildfires in Northern California, and its restoration and rebuilding efforts will continue".

"The company today provided the 15-day advance notice required by recently enacted California law that it and its wholly owned subsidiary Pacific Gas and Electric Company now intend to file petitions to reorganize under Chapter 11 of the US Bankruptcy Code on or about January 29", a statement said.

"We believe a court-supervised process under Chapter 11 will best enable PG&E to resolve its potential liabilities in an orderly, fair and expeditious fashion", interim CEO John Simon, the company's general counsel, said in a statement.

The company said it will be able to gain access to capital and resources it needs to continue providing service to customers as it restructures.

The utility said it would keep spending on system safety as it provides gas and electric "in an environment that continues to be challenged by climate change".

California's wildfires in 2017 and 2018 will likely cost tens of billions of dollars.

A bankruptcy filing would represent a last resort if the company is unable to get government relief that would allow it to pass on liabilities to customers, a maneuver enacted into law to help the company grapple with 2017 fires, the sources added.

California law says utility companies can be held liable for fire damage caused by their equipment, even if they weren't negligent in maintenance.

The company's intent to file voluntary bankruptcy proceedings on or about January 29 came in a one paragraph statement. It also expects that its employees will continue to be paid and receive healthcare benefits during the reorganizational process.

Barricades surrounded the company's headquarters office in downtown San Francisco after the Chapter 11 announcement.

"Our goal will be to work collaboratively to fairly balance the interests of our many constituents-including wildfire victims, customers, employees, creditors, shareholders, the financial community and business partners-while creating a sustainable foundation for the delivery of safe service to our customers in the years ahead".

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The company has engaged in discussions with potential lenders with respect to Debtor-in-Possession ("DIP") financing.

In addition, a series of wildfires in 2017, many of which were also blamed on PG&E, caused $10 billion in damages and 44 deaths.

On Sunday, PG&E's chief executive, Geisha Williams, resigned. Her departure follows the exit of three PG&E executives earlier this month - Patrick Hogan, senior vice president of electric operations at PG&E's utility unit; Kevin Dasso, vice president of electric asset management; and Gregg Lemler, vice president of electric transmission.

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