Pacific Gas & Electric (PG&E) filed for Chapter 11 bankruptcy protection in anticipation of a tidal wave of litigation stemming from the Nov. 8 Camp Fire, which destroyed an entire town and killed 86 people.
Bankruptcy court filings show that PG&E’s liabilities after the Camp Fire – the largest wildfire in the state’s history – have topped $50 billion while the utility’s assets are valued at about $71 billion, according to The Washington Post.
The bankruptcy announcement has riled people throughout the state, including investors, government officials, and the general public. Likely to suffer most from the filing are the wildfire victims. The PG&E bankruptcy puts an immediate halt to lawsuits seeking damages from the wildfires and consolidates them in bankruptcy court, where they will almost certainly result in pared-down awards for damages.
PG&E’s bankruptcy would effectively preclude wildfire victims from seeking punitive damages and force them to compete with the utility’s creditors, including bondholders, for payouts.
The general public could also see utility rates soar as PG&E struggles to recoup whatever it loses in payouts, judgments, and penalties stemming from the Camp Fire. PG&E is the largest utility company in the U.S. and serves about 16 million people in central and northern California.
PG&E said it intends to pay its suppliers in full under normal terms for goods and services provided on or after the date of the Chapter 11 filing, according to Reuters. The company also filed a motion seeking the court’s approval for a $5.5 billion debtor-in-possession financing, which would keep its operations running while it undergoes bankruptcy proceedings.
According to Reuters, the German reinsurance company Munich Re called the Camp Fire the world’s most expensive natural disaster of 2018. The insurer estimated overall losses from the fire to be $16.5 billion.