SAN FRANCISCO (Reuters) - California power provider PG&E Corp on Monday unveiled the outlines of a reorganization plan that will pay $17.9 billion for claims stemming from the wildfires that pushed it to seek bankruptcy protection.
The plan filed in U.S. Bankruptcy Court in San Francisco includes payments capped at $8.4 billion for wildfire victims, payments capped at $8.5 billion for reimbursing insurers that had paid victims and a $1 billion settlement with local governments.
The plan also would pay PG&E’s debts in full and honor the company’s contracts, including ones for buying renewable energy to help California meet its goals for cutting greenhouse emissions.
“Under the plan we filed today, we will meet our commitment to fairly compensate wildfire victims and we will emerge from Chapter 11 financially sound and able to continue meeting California’s clean energy goals,” PG&E Chief Executive and President Bill Johnson said in a statement.
San Francisco-based PG&E sought Chapter 11 bankruptcy protection in January. At the time, the company expected more than $30 billion in liabilities from wildfires in California in 2017 and 2018, including November’s Camp Fire, the deadliest and most destructive wildfire of the state’s modern history.
Lawyer Michael Kelly of Walkup, Melodia, Kelly & Schoenberger in San Francisco said wildfire victims like those he represents, including victims of the Camp Fire, will find what the plan offers them to be too little.
They also will be stunned that PG&E did not propose sacrifices from its bondholders or shareholders, Kelly said.
“It’s not in any way, shape or form satisfactory or fair,” Kelly told Reuters.
PG&E must file a detailed reorganization plan by Sept. 29, the day its so-called exclusive period for filing a Chapter 11 plan expires.
If PG&E resolves its bankruptcy by the end of June 2020, it will be able to participate in a recently enacted, $21 billion state fund to help California’s investor-owned utilities pay for future wildfires liabilities.
The utilities would help support the fund with contributions. PG&E has said that taking part in the fund will enhance its finances over the long term.
According to the outline of its reorganization plan, PG&E will make a required $4.8 billion initial contribution to the fund.
PG&E said in a statement it expects its plans will include substantial equity financing, which may include a rights offering to existing shareholders, and that it aims to raise $14 billion to help pay wildfire victims and pay into the state fund.
Corporate reorganization plans generally need widespread support of creditors, and debtors can spend months getting the necessary backing.
PG&E will ultimately need to win approval for a reorganization plan from U.S. Bankruptcy Judge Dennis Montali, who has indicated he is willing to consider viable plans from other parties.
Reporting by Jim Christie; Editing by Chris Reese and Sonya Hepinstall