PG&E stock dropped after bondholders and wildfire victims teamed up to offer a recovery plan for the bankrupt California utility that would all but wipe out its stockholders.
PG&E Corp. shares dropped as much as 10% after bondholders and wildfire victims teamed up to offer a competing recovery plan for the bankrupt California utility that would all but wipe out its stockholders.
If a judge lets the coalition’s plan go forward, PG&E could lose control of the bankruptcy and its own reorganization plan, which envisions letting stockholders keep a significant stake.The bondholders — including Elliott Management Corp. and Pacific Investment Management Co. — and the committee representing fire victims said their new proposal includes a $24-billion settlement to pay all claims from fires blamed on PG&E’s equipment.
It’s unusual for a bankrupt company to lose that priority, and Judge Dennis Montali rejected an earlier effort to supplant PG&E. But this time the coalition “likely has a good shot at ending the utility’s control,” said Negisa Balluku, a litigation analyst at Bloomberg Intelligence. “The competing plan may more efficiently solve the case’s key objective of compensating wildfire victims,” she wrote in a new report.
The group’s proposal “represents a path forward that recognizes the victims’ losses and puts their interests ahead of shareholders,” Robert Julian, an attorney for the official committee representing fire victims, said in a statement.
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