Pacific Gas & Electric Co. (PG&E) has lost the exclusive right to file its reorganization plan in court after a federal judge this week cleared the way for bondholders to file a competing version.
The U.S. Bankruptcy Court for the Northern District of California will allow bondholders that include Elliott Management Corp. and Pacific Investment Management Co. to present their own reorganization plan, setting the stage for a showdown.
PG&E would now compete with the bondholders over how best to deal with an estimated $30 billion of wildfire liabilities that forced the company to file for Chapter 11 bankruptcy protection earlier this year.
If both plans can be confirmed, then voters would chose one or leave the decision up to the court. Judge Dennis Montali said the creditors and fire victims have “spoken loudly and clearly” that they want their proposal heard.
The development throws another wrench into a complicated and large bankruptcy. PG&E has $34 billion of debt financing ready to fund the reorganization, while the bondholders say their plan would allocate more to wildfire victims and others.
The court’s decision also comes as PG&E has shut off power to hundreds of thousands of people this week in Central and Northern California to help prevent wildfires, which has stirred public outrage and led to widespread criticism of the company.
The San Francisco-based utility said it was disappointed in the court’s decision, but added that its plan would ultimately be best for all stakeholders and said it was confident that it would be the one confirmed.
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