SAN FRANCISCO (CN) – Pacific Gas and Electric attacked two plans to rescue the besieged utility from bankruptcy Tuesday, saying the plans came from groups with self-serving and opportunistic motives.
“They are here to acquire the company at a substantial discount and advance their claims,” PG&E lawyer Stephen Karotkin said of one plan that would give bondholders a majority stake in the company.
U.S. Bankruptcy Judge Dennis Montali spent over three hours hearing arguments on two groups’ plans to bring PG&E out of bankruptcy. The restructuring plans proposed by bondholders and insurers would give each group a major stake in the company post-bankruptcy.
Both groups asked Montali to end PG&E’s exclusive right to propose a reorganization plan ahead of a Sept. 26 deadline. They say a more competitive process for filing bankruptcy plans will help bring about a fairer and faster resolution to the case.
“There really is no time to waste,” said Abid Qureshi, a lawyer representing a group of 25 bondholders.
PG&E must emerge from bankruptcy by June 30, 2020, to gain access to a $21 billion wildfire liability fund approved by California lawmakers and Gov. Gavin Newsom last month.
PG&E insists that terminating its exclusive right to file a plan will make it more difficult to achieve consensus among stakeholders and avoid unnecessary litigation. PG&E intends to file the plan Sept. 9.
The bondholders want to invest $30 million in PG&E, which would give them a majority stake in the company. Their plan would also make at least $16 billion available to compensate victims of wildfires caused by PG&E equipment in 2017 and 2018.
The insurers propose taking more than $20 billion they say PG&E owes them for wildfire-related insurance claims and turning the debt into equity, giving them a major stake in the post-bankruptcy company.
Cecily Dumas, a lawyer representing the wildfire victims, said her clients cannot assess the fairness of either plan until after the Oct. 21 deadline for filing wildfire claims.
A decision on whether PG&E can be held liable for the 2017 Tubbs Fire must also be resolved before any plan can be adequately evaluated, she said. The wildfire victims do not currently support either plan, but they do support ending PG&E’s exclusive right to file its plan.
Montali said he was not at all surprised that stakeholders submitted proposals that might “feather their own nests.” He took arguments on the motions to end PG&E’s exclusive right under submission.
PG&E filed for bankruptcy in January as it faced a potential $30 billion in liability for wildfires allegedly caused by its failure to maintain equipment and vegetation around power lines.