PG&E, USí Largest Energy Utility Firm, to File for Bankruptcy as Potential Liabilities From California Wildfires Reaches Billions
U.S. utility Pacific Gas and Electric Company (PG&E) disclosed on Monday that it will file for bankruptcy. USí largest energy utility firm with a market cap of $13+ billion said that the decision was forced by the wildfires which destroyed lives and property in California in 2017 and 2018.
Per a BBC report, the utility firm faces liabilities that could reach $30 billion. Already, investigators have concluded that the firmís equipment caused a minimum of 17 major wildfires in 2017.
This includes Californiaís deadliest fire on record which killed 86 people and destroyed around 14,000 homes. If PG&Eís equipment is found to have caused this fire, it could face significant liabilities far exceeding its insured amount.
Sharp Drop in Share Price
The news sent the companyís shares tumbling by nearly 50% in Mondayís early trading.
PG&E, which is more than a century old, has had its debt downgraded to junk status.
According to the interim CEO of PG&E, John R. Simon, filing for Chapter 11 bankruptcy is the best path forward:
According to Bank of America Merrill Lynch, the move to file for Chapter 11 bankruptcy is an Ďaccelerated attempt to stem forthcoming claims and place existing claims in tandem with unsecured creditorsí.
The energy utility has also assured customers that services will continue as normal. Currently, PG&E serves around 15 million people in the state of California. The energy utility which boasts of 20,000 employees, also assured the workers that they would continue to get paid during the Chapter 11 process:
Besides employees and customers, other parties that are bound to be affected by PG&Eís bankruptcy are its suppliers. This includes the second biggest pipeline operator in North America, Kinder Morgan, according to Reuters.
The bankruptcy announcement follows a tumultuous weekend which the companyís chief executive, Geisha Williams, vacated both the CEO position and the board seat. Simon, who replaced Williams in an acting capacity, was the firmís general counsel.
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