PG&E Exits Bankruptcy With Wildfire Settlements Finalized
Pacific Gas and Electric Co. (PG&E) has officially emerged from Chapter 11 bankruptcy. The process required overcoming multiple hurdles tied to the company’s compensation for victims of wildfires caused by PG&E’s equipment, and reimbursement to disaster support agencies.
PG&E Pleads Guilty to Involuntary Manslaughter
Leading up to the approval of PG&E’s restructuring plan, the company pled guilty to 84 counts of involuntary manslaughter related to 80 deaths from the 2018 Camp Fire, which also burned over 150,000 acres and nearly 19,000 structures. As part of the plea bargain, PG&E is required to pay $3.5 million in fines. These numbers may be troubling to some, as the $3.5 million total equates to about $43,000 in penalties per person killed as a result of PG&E’s criminal recklessness.
Prior to approval, terms of the plea deal were modified because opponents – and the Judge who oversaw the proceedings – expressed concerns that PG&E might attempt to pay the penalties from a fire victim trust. The resulting deal ensured fire victims would not be burdened with paying for PG&E’s criminal liability.
FEMA Could Receive $1 Billion in Reimbursement
FEMA and CalOES sought $4 billion in reimbursement for providing support to victims of wildfires in 2015, 2017, and 2018, which were caused by PG&E equipment. However, FEMA agreed to a settlement of $1 billion and CalOES withdrew their claim. Though the settlement with FEMA is to be paid from a $13.5 billion victim’s settlement fund, that money will only be paid out if funds are remaining after PG&E compensates approximately 70,000 wildfire victims.
Collapse Avoided in the Final Hours
PG&E’s proposed $13.5 billion victim’s fund was to be comprised of 50% of PG&E stock, however, PG&E’s stock price had fallen dramatically since the proposal was developed. As a result, victims and their representatives threatened to withdraw support for the proposal, which would have jeopardized PG&E’s restructuring plan. In response, PG&E agreed to increase the volume of stock provided, paving the way for approval of the restructuring plan.