Calif. wildfire victims lawyer calls PG&E plan 'totally unacceptable'Posted On: Sep. 11, 2019 11:12 AM CST
(Reuters) — PG&E Corp.'s plan to cap payments to victims of California wildfires blamed on the power producer is "totally unacceptable," a lawyer representing victims in the utility's bankruptcy case said on Tuesday.
San Francisco-based PG&E unveiled on Monday a proposed plan to exit bankruptcy that included payments capped at $8.4 billion for wildfire claims.
The plan forces fire victims and government entities to seek compensation from the same fund, which will dilute payouts for everyone, said Cecily Dumas, a BakerHostetler lawyer who represents the official committee of tort claimants in PG&E's bankruptcy.
State investigators have blamed PG&E transmission lines with causing wildfires in 2017 and 2018 including the Camp Fire that killed 85 people.
Ms. Dumas said that government agencies such as the Department of the Interior and the Federal Emergency Management Agency could have billions of dollars in claims, leaving far less for victims than $8.4 billion.
At the same time, PG&E said it intends to pay other unsecured creditors such as noteholders in full in cash when its plan goes into effect next year. "That's unfair," said Ms. Dumas.
A PG&E spokeswoman said the plan meets the company's legal requirements and "proposes a rate-neutral framework that fairly compensates wildfire victims and other stakeholders."
The plan must be approved by U.S. Bankruptcy Judge Dennis Montali in San Francisco, and companies in Chapter 11 generally seek broad support from creditors.
Mr. Montali had referred the process for estimating what PG&E owes for property loss, personal injury and wrongful death claims to U.S. District Court Judge James Donato in San Francisco. Mr. Donato said on Tuesday he expected to resolve the estimated compensation in January.
PG&E also capped payments at $8.5 billion for reimbursing insurers that had paid victims and at $1 billion for local governments.
PG&E said it would raise $14 billion by selling stock, and had commitments from funds led by Knighthead Capital Management LLC to invest $1.5 billion. The company said large banks expressed confidence that $30 billion could be raised in both debt and equity.
Shares of PG&E ended down 2.6% on Tuesday at $10.90.
Ms. Dumas said the plan also violates the so-called absolute priority rule, which requires that creditors get paid in full before shareholders receive anything.
She said the court should allow wildfire victims to opt for a $30 billion plan by proposed by bondholders led by Elliott Management, which included $16 billion for all PG&E's pre-bankruptcy wildfire claims.