Pacific Gas & Electric attorneys in an Aug. 6 court filing objected to a reorganization proposal outlined by a group of insurance companies that hold claims connected to the Northern California wildfires, saying that introducing competing plans into its bankruptcy process would be a “needless distraction.”
The plan, detailed by the ad hoc group of subrogation claim holders in a July 23 motion filed with the bankruptcy court, would allocate $15.8 billion to the wildfire claims filed against PG&E. In the same motion, the group asked the judge overseeing PG&E’s bankruptcy to end the company’s exclusive right to file a reorganization plan (see CEM No. 1549 ).
But PG&E opposed the motion, saying the company is on the brink of estimating its wildfire liabilities and that ending its exclusivity would lead to chaos.
“At this time, [PG&E’s] focus must remain on pursuing the expeditious and fair resolution of their wildfire liabilities, while acting as a fiduciary to build stakeholders consensus around a confirmable plan,” the attorneys said.
The ad hoc group of subrogation claim holders collectively hold more than $20 billion in wildfire claims against PG&E. The group’s proposal would equitize around 90 percent of the $15.8 billion set aside to resolve these claims, and would remain neutral to ratepayers, according to its motion. Previously, a group of bondholders outlined their own reorganization plan for PG&E, centered around $30 billion in new investment—$16 billion of which would be allocated to wildfire claimants (see CEM No. 1549 ).
In its response, PG&E said it has made “significant progress” in its reorganization, including reaching a $1-billion settlement agreement with a group of local governments and public entities in areas affected by the Northern California wildfires.
The attorneys also cautioned the judge against ending PG&E’s exclusivity period before the company is able to estimate the extent of wildfire liability it faces. The utility is facing tens of thousands of unliquidated wildfire claims, according to its filing, and terminating its exclusivity period before these have been quantified could prevent it from exiting bankruptcy by June 2020—the deadline after which PG&E will not be allowed access to a new wildfire fund.
PG&E attorneys also urged the judge to maintain its exclusivity during the legislative session, which will continue until Sept. 13. Gov. Gavin Newsom signed AB 1054, a sweeping wildfire-related bill, in July, but lawmakers are continuing to work on solutions to the issue, they said.
“This process should not be derailed or usurped by the parties that have achieved a consensus with no one but themselves, and who are motivated by a singular desire to promote their own parochial interests and to secure a windfall at the expense of other constituencies in these cases,” the attorneys added.
PG&E’s objections were echoed by a group of the company’s shareholders, who said in an Aug. 6 filing that ending PG&E’s exclusivity would not help move the proceeding along. The group had also objected to the plan detailed by the bondholders, saying that both groups were simply trying to advance their own interests.
In a separate filing, Columbus Hill Capital Management, a manager of funds holding claims against PG&E, also protested the subrogation group’s motion. PG&E’s bankruptcy case is among the most complex ever filed, the group said, and allowing the utility only seven months of exclusivity would create chaos. The group added that progress has been made toward “a framework for a plan,” but various gaps—including estimating the value of claims against the utility—still remain.
Separately, PG&E and First Solar Inc. filed an Aug. 6 stipulation requesting the court’s authorization to terminate a power-purchase agreement concerning a 75-MW solar facility in Kern County.
On July 25, First Solar filed a motion with the court asking for safe-harbor protections for the contract. The company is required to spend millions of dollars in development costs over the next few months under the agreement, while running the risk that PG&E will choose not to honor the contract as it navigates its bankruptcy proceeding. Accordingly, First Solar asked that the automatic stay placed on PG&E’s contracts not apply to the agreement.
Following discussions with PG&E, both parties jointly filed the stipulation requesting a modification of the automatic stay instead, to allow for termination of the contract within 30 days of being approved.