SAN FRANCISCO (CN) — More than 85% of victims who lost property and loved ones in California wildfires sparked by Pacific Gas and Electric’s equipment voted to support the utility’s exit from bankruptcy, according to a certified ballot count released Friday.
Tens of thousands of fire victims cast ballots on the plan over an approximately six-week period that started April 1 and ended May 15.
PG&E touted the results Friday in an 82-page legal brief supporting confirmation of its $56.1 billion plan for exiting Chapter 11 bankruptcy.
“Fire victims have spoken, and they have spoken loudly and resoundingly in favor of the Plan,” PG&E wrote.
Just over 88% of fire victims voted in favor of the plan, and nearly 12% voted against. Because certain large creditors were given more voting power based on the value of their claims, the vote tally was recorded as 85.1% in favor and 14.9% against when factoring in claim amounts.
Each fire victim’s vote was worth $1 for the purposes of voting, but certain large creditors, such as AT&T, were assigned higher claim amounts for voting purposes.
PG&E surpassed its goal of winning two-thirds approval among fire victims. The utility did not immediately provide requested information Friday on how many ballots were cast.
Critics of PG&E’s plan had argued that funding half of a $13.5 billion compensation fund with stock in a reorganized PG&E put fire victims at risk of losing billions of dollars. Pandemic-related stock market turmoil and the risk of future wildfires looms over PG&E’s impending stock and financial performance.
Key details of the plan also remain unresolved, as PG&E is still negotiating with the Tort Claimants Committee, which represents fire victims, on when the victims’ trust will be allowed to sell PG&E stock to obtain cash for paying claims.
One vocal critic, Santa Rosa resident and Tubbs Fire survivor Will Abrams, had asked the court to invalidate thousands of votes cast by clients of the Texas-based law firm Watts Guerra. Abrams had accused the firm’s managing partner Mikal Watts of failing to disclose a conflict of interest. U.S. Bankruptcy Judge Dennis Montali denied the motion in a 10-page ruling issued Monday.
On May 15, the Tort Claimants Committee filed a 35-page objection against the plan, arguing it fails to comply with the terms of the $13.5 billion settlement reached in December last year.
The committee argued that PG&E has yet to finalize a Registration Rights Agreement, which will specify when the victims’ trust can sell stock. The committee argues the trust should be allowed to sell stock under the same favorable terms offered to financial backers funding the utility’s exit from bankruptcy.
The committee further insisted that financing for the plan has also changed “in a manner that reduces the value of stock” for fire victims. Lawyers also contended the definition of “subrogation wildfire claim” was changed in a way that would dilute the compensation fund by pushing billions of dollars in insurance claims into the fire victims’ trust.
Additionally, the committee complained that thousands of unresolved securities fraud claims will add billions of dollars in debt, “further weakening the value of the stock assigned to the Fire Victim Trust.”
Despite that criticism, PG&E’s outgoing chief executive Bill Johnson maintained an optimistic outlook in a statement released by the company Friday.
“The acceptance of the Plan of Reorganization by wildfire victims and other voting creditors and shareholders is an important milestone in our financial restructuring process, moving PG&E one step closer to compensating fire victims and emerging from Chapter 11 as a stronger, financially sound company positioned for long-term success,” Johnson said.
A multi-day bench trial on confirmation of PG&E’s bankruptcy plan is scheduled to start on Wednesday, May 27. The trial will be conducted by video conference due to the Covid-19 pandemic.
PG&E’s bankruptcy plan also requires approval by the California Public Utilities Commission, which is scheduled to vote on the plan on Thursday, May 28.
PG&E has agreed to pay $25.5 billion in settlements, including $1 billion for 18 public entities, $11 billion for insurers who covered wildfire losses and $13.5 billion in cash and stock for all other wildfire claims. PG&E faced a potential $30 billion in liability when it declared bankruptcy on Jan. 29, 2019.
The company must exit bankruptcy by a June 30 deadline to gain access to a state-established insurance fund to cover future wildfire liabilities.