Bankrupt PG&E could go up in flames as shares drop over 30%

A court ruling could put PG&E’s fate in the hands of outsiders, and perhaps wipe out the stock, in the largest utility bankruptcy in US historyA candle-lit bar at Reel and Brand in Sonoma, California, on October 9 2019, during a planned power outage by the Pacific Gas & Electric utility company. Picture: AFP/BRITTANY HOSEA-SMALL

The decision escalates an already-heated battle for control of the largest utility bankruptcy in US history. Montali agreed to let bondholders, including Pacific Investment Management and Elliott Management, pitch their own restructuring plan alongside PG&E’s, so they can both come up with ways the utility could deal with an estimated $30bn in wildfire liabilities. Some of PG&E’s bonds jumped to their highest levels in almost two years.

“In the worst case, the competing plan could win and completely wipe out current shareholders,” Greg Gordon, an analyst at Evercore ISI, said in a research note. “In other words, zero is possible.” The creditors, including the fire victims, have “spoken loudly and clearly that they want their” proposal to be considered, Montali said in his ruling. While PG&E’s plan is “on track, as well as can be expected,” he wrote, so is the competing version from creditors. The court denied requests by other parties to let them offer recovery plans, too.

PG&E filed for bankruptcy on January 29 to address liabilities resulting from a series of devastating fires that tore through Northern California in 2017 and 2018. The effects have been rippling through millions of ratepayers, hundreds of creditors, thousands of workers, and the state’s political system.

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