PG&E files joint Chapter 11 plan of reorganization
—PG&E Corporation and Pacific Gas and Electric Company filed a joint Chapter 11 Plan of Reorganization in the United States Bankruptcy Court for the Northern District of California.
This chapter of the Bankruptcy Code generally provides for reorganization, usually involving a corporation or partnership. A chapter 11 debtor usually proposes a plan of reorganization to keep its business alive and pay creditors over time, according to USCourts.gov.
This plan is another step in a multi-step process as PG&E works to compensate wildfire victims and emerge from Chapter 11 while continuing to improve safety and operational performance for its customers. The plan will be updated as developments require.
“Under the plan we filed today, we will meet our commitment to fairly compensate wildfire victims and we will emerge from Chapter 11 financially sound and able to continue meeting California’s clean energy goals,” said Bill Johnson, PG&E Corporation’s Chief Executive Officer and President. “Throughout this process, we remain focused on the guiding principles of safely and reliably delivering energy to our customers, further reducing the risk of wildfires, and continuing to support the state’s clean energy goals. I am confident that we can, and will, provide better service to our customers and communities, and our Plan of Reorganization is another step in this process.”
PG&E is on track to achieve confirmation of the plan in advance of the June 30, 2020, deadline set forth in Assembly Bill 1054 for participation in the newly-established state wildfire fund. The plan proposes a rate-neutral framework that fairly compensates wildfire victims and other stakeholders, prioritizes the interests of our customers and communities, and meets PG&E’s legal obligations.
It is comprised of, among other things, the following:
- Compensation of wildfire victims and certain limited public entities from a trust funded for their benefit in an amount to be determined by the Bankruptcy Court not to exceed $8.4 billion;
- Compensation of insurance subrogation claimants from a trust funded for their benefit in an amount to be determined by the Bankruptcy Court not to exceed $8.5 billion;
- Payment of $1 billion in full settlement of the claims of certain public entities relating to the wildfires, as previously announced;
- Payment in full, with interest, of all prepetition funded debt obligations, all prepetition trade claims and employee-related claims;
- Assumption of all power purchase agreements and community choice aggregation servicing agreements;
- Assumption of all pension obligations, other employee obligations, and collective bargaining agreements with labor;
- Future participation in the state wildfire fund established by Assembly Bill 1054; and
- Satisfaction of the requirements of Assembly Bill 1054.
PG&E’s Chapter 11 emergence financing is expected to include a substantial equity financing component, which could include a rights offering to existing shareholders or one or more offerings in the capital markets. PG&E intends to work with financial institutions over the next several weeks to obtain up to $14 billion of total equity financing commitments. All proceeds of the equity commitments will be used to pay wildfire victims and help fund PG&E’s contributions to the state wildfire fund.
The plan is subject to confirmation by the Bankruptcy Court in accordance with the provisions of the Bankruptcy Code, and to the occurrence of the effective date in accordance with the conditions set forth in the plan.
PG&E’s full Plan of Reorganization is available for download here.
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