PG&E retains right to control reorganization plan

U.S. Bankruptcy Judge Dennis J. Montali ruled Friday PG&E Corp. should retain the right to pitch a reorganization plan that deals with the billions of dollars in wildfire liabilities that forced the power utility to file for Chapter 11 projection.

Montali denied a motion from creditors, including Pacific Investment Management Co. and Elliott Management Corp., to strip PG&E of its exclusive right to create a viable restructuring plan that would allow the utility to emerge from bankruptcy. In re: PG&E Corp., 19-30088 (N.D. Cal., filed Jan. 31, 2019).

A PG&E spokesperson said in a statement the company is working on a "plan of reorganization that will compensate wildfire victims, protect customer rates, and put PG&E on a path to be the energy company our customers need and deserve."

Montali heard arguments on Aug. 13 in San Francisco on whether the creditors should wrest control of the exclusivity from PG&E, according to news reports. Montali told attorneys he would file a written ruling following a Wednesday hearing on a related matter.

The Aug 13. hearing made from some strange bedfellows. PG&E joined with a group representing wildfire claimants and shareholders to stave off the bondholder group, which argued competing bankruptcy plans would propel the proceedings and ensure the utility would emerge from bankruptcy by its June 30, 2020 deadline, according to news reports.

Sitting before a packed courtroom, Montali reminded attorneys the path must first ensure a fair process for the wildfire claimants.

PG&E attorney Stephen Karotin accused the bondholders of only trying to bolster their claims and assured the judge the utility would file a reorganization plan by Sept. 9, according to news reports.

Back in July, California lawmakers passed AB 1054, which secured a $21 billion insurance fund for utilities hit with wildfire liabilities. PG&E must fulfill the bill's requirement to pay all claims in accordance with any settlement agreement by the June 2020 deadline in order to participate in the mitigation fund.

-- Glenn Jeffers