(Bloomberg) -- California Governor Gavin Newsom will ask a U.S. bankruptcy judge to delay for two weeks a bondholder request to end PG&E Corp.’s exclusive control over its reorganization.
Newsom’s office will request the judge to hold off on issuing an order to allow time to develop a new process for submitting restructuring proposals to the court, according to advisers to the governor. Meanwhile, the administration will support giving PG&E time to develop its own plan for emerging from the largest U.S. utility bankruptcy.
The governor’s proposal comes as PG&E’s creditors are fighting for control of the San Francisco-based company.
An ad hoc committee of unsecured noteholders led by Pacific Investment Management Co., Elliott Management Corp. and Davidson Kempner Capital Management is seeking to file a competing reorganization plan. PG&E now has the exclusive right until Sept. 29 to submit a plan to restructure and exit bankruptcy.
The creditors group is set to present arguments to Judge Dennis Montali at a court hearing in San Francisco Wednesday to terminate PG&E’s exclusivity so it can offer its own proposal.
A group of insurance companies -- including Seth Klarman’s Baupost Group -- with $20 billion in claims against PG&E has also called for an end to the utility’s exclusivity period. That group on Tuesday floated a broad outline of its own restructuring strategy.
Wildfire Liabilities
PG&E filed for bankruptcy in January to deal with an estimated $30 billion in liabilities from wildfires that its equipment may have ignited in 2017 and 2018. The judge has set a hearing on Wednesday to decide whether to allow the ad-hoc committee of creditors, and potentially other stakeholders, the opportunity to present their own reorganization plans.
PG&E has accused the bondholders of trying to “hijack the Chapter 11 plan process” and argued last week in a court filing that it should be allowed to finish its plan without interference.
The Newsom administration is concerned that the competing proposals could get mired in litigation if allowed to play out in court, making it more difficult for PG&E to emerge from bankruptcy by June 30 as required under legislation passed this month.
If PG&E isn’t able to hit that deadline, it wouldn’t be able to dip into a $21 billion wildfire insurance fund that would be set up to help utilities pay for fire claims.
Under Newsom’s proposal, the judge would have to approve any new process developed by the parties for submitting competing plans. Several major parties have indicated they would support the effort, aides said.
In May, Newsom asked the court to deny PG&E’s request for an extra six months to file its restructuring plan and instead be required to submit it by Aug 15. The judge ruled then that PG&E could have until September.
To contact the reporters on this story: Mark Chediak in San Francisco at mchediak@bloomberg.net;Scott Deveau in New York at sdeveau2@bloomberg.net
To contact the editors responsible for this story: Lynn Doan at ldoan6@bloomberg.net, ;Liana Baker at lbaker75@bloomberg.net, Michael Hytha, Joe Ryan
©2019 Bloomberg L.P.
Advertisement