PG&E on Jan. 29 said that it and its primary operating subsidiary, Pacific Gas and Electric Company have filed voluntary petitions under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the Northern District of California.
PG&E said that it remains committed to, among other things, delivering safe and reliable electric and natural gas service to customers; continuing to make critical investments in system safety and maintenance; as well as supporting the orderly, fair, and expeditious resolution of its liabilities resulting from the 2017 and 2018 wildfires.
John R. Simon, PG&E Corporation Interim CEO, said in the statement, in part: "Our most important responsibility is and must be safety, and that remains our focus. Throughout this process, we are fully committed to enhancing our wildfire safety efforts, as well as helping restoration and rebuilding efforts across the communities impacted by the devastating Northern California wildfires. We also intend to work together with our customers, employees and other stakeholders to create a more sustainable foundation for the delivery of safe, reliable and affordable service in the years ahead. To be clear, we have heard the calls for change and we are determined to take action throughout this process to build the energy system our customers want and deserve."
PG&E said that it also filed a motion seeking interim and final approval of the court to enter into an agreement for $5.5bn in debtor-in-possession (DIP) financing with J.P. Morgan, Bank of America, Barclays, Citi, BNP Paribas, Credit Suisse, Goldman Sachs, MUFG Union Bank, and Wells Fargo acting as joint lead arrangers.
PG&E said that it expects the court to act on an interim basis on the DIP motion in the coming days, noting that the DIP financing would provide PG&E with necessary capital to ensure essential maintenance and continued investments in safety and reliability for the expected duration of the Chapter 11 cases.
PG&E said that it also filed various motions with the court in support of its reorganization, including requesting authorization to continue paying employee wages, as well as providing healthcare and other benefits; PG&E expects the court to act on those requests in the coming days. The company said that it intends to pay suppliers in full under normal terms for goods and services provided on or after the filing date of Jan. 29.
PG&E said that it has appointed James A. Mesterharm, a managing director at AlixPartners, LLP and an authorized representative of AP Services, LLC, (APS), to serve as chief restructuring officer, as well as John Boken, a managing director at AlixPartners and an authorized representative of APS, to serve as deputy chief restructuring officer.
PG&E also noted that the California Department of Forestry and Fire Protection (CAL FIRE) on Jan. 24 released the results of its investigation of the 2017 Tubbs Fire, which concluded that PG&E equipment did not cause the fire. PG&E said that the comprehensive analysis underlying its decision to pursue reorganization under Chapter 11, conducted with the assistance of independent legal and financial advisors, took into account the company’s longstanding belief based on available evidence that its equipment did not cause the Tubbs Fire. PG&E said that as such, it continues to believe that the Chapter 11 process will facilitate the orderly, fair, and expeditious resolution of the liabilities that have arisen, and will continue to arise, in connection with the 2017 and 2018 Northern California wildfires.
The company said that additional resources for customers and other stakeholders, as well as other information on its filings, can be accessed by visiting its restructuring website at pge.com/reorganization. Court filings and other documents related to the Chapter 11 process in the United States are available on a separate website administered by PG&E’s claims agent, Prime Clerk, at https://restructuring.primeclerk.com/pge, the company said.
The court, in a Jan. 29 order, said that it would hold a hearing that day specifically for the court and principal counsel to discuss the scheduling of important hearings in the first days or weeks of the cases.
Separately on Jan. 29, the California ISO said that it has been closely monitoring the system and markets since PG&E announced its intention to file for bankruptcy protection, and has not detected any material change in market trends that could be attributed to the PG&E activity.
The ISO said that it does not expect any delay in payments due on Jan. 29 to market participants.
PG&E to date has complied with all credit support requirements in the ISO tariff, the ISO said, noting that PG&E filed a motion asking the court for authority to continue paying ISO market invoices for transactions prior to the bankruptcy filing. Invoices for transactions after the filing are continuing to be paid according to normal procedure, the ISO said, adding that it is continuing its normal day-to-day operations with the utility.