PG&E's Bankruptcy Judge Opens the Door to Rival Chapter 11 Exit Plan
October 09 2019 - 6:21PM
Dow Jones News
By Peg Brickley
The judge presiding over PG&E Corp.'s bankruptcy handed
shareholders a loss, opening the door to a competition over the
best path out of bankruptcy that pits the troubled utility against
bondholders led by Elliott Management Corp.
Judge Dennis Montali of the U.S. Bankruptcy Court in San
Francisco cleared the way for a rival chapter 11 plan from Elliott
and other bondholders that are allied with victims of wildfires
that drove PG&E to bankruptcy. His ruling stripped PG&E of
the sole right to propose a chapter 11 plan covering billions of
dollars of damages from blazes linked to PG&E equipment.
The decision means at least two chapter 11 plans will move
forward as PG&E shifts into a crucial phase of its chapter 11
proceeding. The coming months will see either a deal with fire
victims or a series of judicial rulings that will produce an
estimate of how much PG&E will have to set aside to cover those
damages.
The rival plans are about $5 billion to $6 billion apart on
where they think that number will fall. Wall Street banks and hedge
funds from California to Connecticut are placing their bets,
cutting deals to finance PG&E's chapter 11 plan, the
bondholders' rival plan or both.
The bondholders proposed a plan to raise new money and use all
but a sliver of PG&E equity to pay off debts, while the company
favors raising both debt and equity financing to dig itself out of
chapter 11 and prevent shareholders from taking a bigger hit.
Write to Peg Brickley at peg.brickley@wsj.com
(END) Dow Jones Newswires
October 09, 2019 18:06 ET (22:06 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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