PG&E Fire Victims, Creditors Join Forces for Bankruptcy Plan

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PG&E Fire Victims, Creditors Join Forces for Bankruptcy Plan(Bloomberg) -- Bondholders battling with shareholders for control of bankrupt PG&E Corp. have teamed up with wildfire victims to present a new reorganization plan for the San Francisco-based utility giant.The creditors -- including Elliott Management Corp. and Pacific Investment Management Co. -- and the official committee representing fire victims said their new proposal includes a $24 billion settlement to pay all claims from fires blamed on PG&E’s equipment. That’s billions of dollars more than PG&E has offered to those who lost loved ones and homes in some of the most destructive fires in California history.The creditors and fire victims are seeking to end PG&E’s exclusive right to pursue its own reorganization plan, which the company filed earlier this month in bankruptcy court. The joint proposal would virtually wipe out current shareholders. PG&E’s plan would allow them to keep their stock and pay wildfire victims less than they’re demanding.PG&E shares fell 5.7% in after-hours trading.The group’s proposal “represents a path forward that recognizes the victims’ losses and puts their interests ahead of shareholders, ” said Robert Julian, an attorney for the official committee representing fire victims, in a statement.PG&E filed for bankruptcy protection in January in the face of an estimated $30 billion or more in liabilities from wildfires. Under PG&E’s reorganization plan, claims from individual wildfire victims would be capped at $8.4 billion, while insurers or insurance claim holders would get $11 billion under a settlement announced last week.“The bondholders’ plan is an attempt to pay themselves more than they are entitled to under the law,” Lynsey Paulo, a PG&E spokeswomen, said via email. “Our plan of reorganization sets forth a framework to meet PG&E’s legal obligations in full while prioritizing victims and customers.”The new bondholder proposal offers $28.4 billion in new money in exchange for 58.8% of the equity in the reorganized PG&E. Under an earlier proposal, creditors had offered financing in exchange for an 85% to 95% stake in the new company.A $24 billion wildfire trust fund would be set up and financed through $12 billion in cash and $12 billion in stock, according to the filing. The trust would have a 39.5% stake in PG&E. Overall, the creditor group and the trust would end up with a combined. 98.3% of the equity in PG&E.Bankruptcy judge Dennis Montali had rejected an earlier request from creditors to be allowed to file their own bankruptcy plan.The case is PG&E Corp., 19-bk-30088, U.S. Bankruptcy Court Northern District of California (San Francisco)(Updates with PG&E share price in fourth paragraph)\--With assistance from Joel Rosenblatt and Steven Church.To contact the reporters on this story: Mark Chediak in San Francisco at mchediak@bloomberg.net;Scott Deveau in New York at sdeveau2@bloomberg.netTo contact the editors responsible for this story: Lynn Doan at ldoan6@bloomberg.net, Boris KorbyFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.


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