A trial that could conclude the bankruptcy of Pacific Gas and Electric began Wednesday via videoconference, with the judge presiding from his breakfast room.
PG&E’s Chapter 11 case is the sixth-largest bankruptcy in U.S. history and by far the largest of any energy utility. The COVID-19 crisis has forced it to be decided by U.S. Bankruptcy Court Judge Dennis Montali from his home, with lawyers arguing from remote locations.
The “confirmation” proceedings to approve or deny PG&E’s proposed reorganization plan lasted just an hour on the first day, with only one witness called.
Christina Pullo, a vice president with claims administrator Prime Clerk, testified about the results of voting on the plan that concluded May 15. Nearly 87,000 wildfire claimants were eligible to vote along with tens of thousands of other creditors, she said.
Pullo confirmed the results of the vote, previously filed in court papers, that showed at least 85% of fire victims and an overwhelming majority of other creditors approved of PG&E’s reorganization plan. That plan, valued at close to $60 billion, includes $13.5 billion for fire victims, $11 billion for the insurance companies and hedge funds that hold third-party subrogation claims, and $1 billion in compensation to local governments for fire-related expenses. (See PG&E Bankruptcy Moves Toward Conclusion.)
The company plans to issue nearly $26 billion in new stock to help pay for the plan.
Pullo faced cross-examination by William Abrams, a wildfire victim who has represented himself throughout the proceedings. Abrams has repeatedly said he opposes the plan because it doesn’t do enough to ensure victims get paid or to force PG&E to become a safer utility.
On Wednesday, he asked Pullo about alleged voting irregularities and about Prime Clerk’s connection to PG&E via its parent company Duff & Phelps, which Abrams said holds a sizable stake in PG&E. As a non-lawyer, his questioning was frequently interrupted by instructions from the judge and objections from some of the dozen or so attorneys who participated in the hearing.
Should Montali approve PG&E’s plan, it would end a bankruptcy that started 16 months ago, when the company filed for Chapter 11 protection and reorganization in January 2019 as it faced up to $30 billion in wildfire liabilities.
State fire investigators determined the utility’s transmission lines ignited massive fires in 2015, 2017 and 2018 that combined killed more than 100 people and destroyed some 25,000 structures.
The fires included the Camp Fire, the largest in state history, that killed 85 residents and leveled more than 14,000 homes in and around the town of Paradise, Calif., in the Sierra Nevada foothills.
Critics have accused PG&E of funneling profits to shareholders rather than maintaining aged infrastructure, such as the century-old Caribou-Palermo line that sparked the Camp Fire.
The California Public Utilities Commission levied a record $1.9 billion in penalties on PG&E for its maintenance and safety failures. The commission is required to approve the utility’s Chapter 11 plan under state law, with a vote scheduled Thursday.
The bankruptcy proceedings are scheduled to continue through next week.