PG&E fire victims approve power giant’s bankruptcy plan
Victims of wildfires blamed on Pacific Gas & Electric Co. voted to approve a reorganization plan crafted by the California power giant, marking one of the last milestones in the company’s effort to exit the largest utility bankruptcy in U.S. history.
More than 85% of fire victims who cast ballots voted in favor of PG&E’s plan that includes a $13.5-billion settlement to fund claims filed on behalf of an estimated 70,000 families and businesses devastated by the some of the worst blazes in California history, according to a court filing Friday. PG&E needed to win support from two-thirds of those who cast a ballot.
The approval comes despite opposition from some fire victims to the settlement, which will be funded in part by PG&E shares. Three members of a committee designated to represent victims in the bankruptcy resigned in protest over the proposal, calling into question whether their financial recovery should be tethered to PG&E stock.
In addition, some victims and their attorneys claimed a lawyer representing the largest group of fire victims has a potential conflict of interest that tainted the voting process. U.S. Bankruptcy Judge Dennis Montali denied a motion to contest the vote, saying a complaint that the bankruptcy rules were violated was unfounded.
The judge will take the vote into consideration when he decides whether to approve the reorganization plan.
PG&E filed for Chapter 11 in January 2019 with an estimated $30 billion in liabilities tied to fires in 2017 and 2018. The company has agreed to settle claims for $25.5 billion with individual victims, insurers and public agencies. It also settled with a group of bondholders who tried unsuccessfully last year to take control of the company.
Fire victims are the only group whose compensation will be funded partly through shares.
PG&E is racing to win court and regulatory approval of its restructuring plan ahead of a state deadline of June 30. Meeting that goal will allow the company to participate in a California wildfire insurance fund that will help the company cover any potential liabilities from future utility-caused fires.
PG&E, which remains on federal probation tied to a deadly gas pipeline blast, agreed to a number of reforms including overhauling its board after regulators found the utility failed to properly operate and maintain power lines that sparked a series of blazes, including the worst in California history.
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