Dive Brief:
- Pacific Gas & Electric (PG&E) has resolved its disputes with the Federal Emergency Management Agency (FEMA) and California Governor's Office of Emergency Services, which filed billions of dollars of claims against the utility due to wildfires that occurred in 2015, 2017 and 2018, an attorney told U.S. Bankruptcy Judge Dennis Montali on Tuesday.
- FEMA has agreed to reduce its ask to $1 billion and have its claims subordinated to those filed by victims of the wildfires, according to attorneys at the Tuesday hearing. The California Governor's Office of Emergency Services would also withdraw its claims of around $2.7 billion — which represents costs incurred by it as well as FEMA — under the deal.
- Lawyers for wildfire survivors had objected to the claims, which threatened to take a slice out of the $13.5 billion payout promised by PG&E to individual fire victims. Montali on Tuesday also postponed a decision on PG&E's disclosure statement — a filing summarizing the company's reorganization plan for the creditors who will vote on it — after raising concerns that the proposed version is too lengthy.
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On Monday, PG&E amended its bankruptcy reorganization plan filed in February, saying the modifications assure the quickest way for fire victims and other claimants to receive payment.
Its plan commits $13.5 billion to resolve claims from the wildfires, through a trust to which PG&E will transfer $6.75 billion in cash paid out over a period of time and $6.75 billion in stock.
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PG&E’s creditors are due to vote on the plan by May 15.
... the utility plans to hold a hearing to confirm the plan on May 27 — around a month before the June 30 deadline by which state law requires PG&E to exit bankruptcy in order to participate in California's wildfire insurance fund.
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Judge Montali has yet to approve the disclosure motion for the amended plan, expressing the view that its 71-page statement is far too verbose, repetitive and tortuous for creditors and victims to gain a good understanding of what would be voted on.
And an argument has been made that the statement doesn't provide nearly enough clarity about fire victims’ risks under the reorganization plan, notably regarding the possibility of one or more catastrophic wildfires caused by PG&E.
Source: Kavya Balaraman for UtilityDive.com