PG&E seeks bankruptcy protection; Newsom urges utility to 'honor promises'

Irving Hamilton
January 14, 2019

PG&E announced Williams's departure Sunday and its plans to file for Chapter 11 bankruptcy a day later.

PG&E's regulator, the California Public Utilities Commission, began in late December to investigate whether the company should make significant structural changes, including becoming owned by the state or splitting up its businesses.

Shares of PG&E fell as much as 52 per cent in pre-market trading. General counsel John Simon will take the helm in the meantime.

Companies negotiate debtor-in-possession loans, often with existing lenders, when they are seriously considering bankruptcy protection so they can continue operations while working through court proceedings. He called on the company to "honor promises" made to energy suppliers and the broader community, and committed his office to helping resolve PG&E's financial crisis. We expect this process also will enable PG&E to access the capital and resources we need to continue providing our customers with safe service and investing in our systems and infrastructure.

The 150-year-old company said: "We recognise that the devastating and unprecedented Northern California wildfires of 2017 and 2018 have had a profound impact on our customers and their communities".

Williams was CEO for less than two years, but she had been with PG&E since 2007.

In theory, California politicians could avert PG&E's bankruptcy with legislative action.

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PG&E said in a securities filing it could potentially raise more money and avoid seeking bankruptcy protection, but argued such a move would be complex, uncertain and expensive. It said on January 3 it was reviewing its structural options and looking for new directors with safety experience. Three months later, however, the utility's equipment again was being looked at as a possible source of the Camp Fire, which killed 86 people and destroyed the town of Paradise.

However, a bankruptcy filing isn't assured and would be a last resort, the people told Reuters, noting that the talks are still in their early stages and are part of a contingency plan. Investors might avoid the company if questions around that risk remain unanswered.

PG&E's liabilities from that fire could be catastrophic if authorities determine its equipment caused the blazes. Bankruptcy law expert Jared Ellias, of UC Hastings College of Law in San Francisco, said that means it's less likely the survivors will get 100 percent payment on their claims for damages.

It is believed the fire was started when a PG&E power line came in contact with nearby trees.

PG&E issued a press release Sunday about changes in their leadership structure, naming John Simon as the Interim Chief Executive Officer.

PG&E faces widespread lawsuits from that fire and one in 2017.

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