Owner of utility company PG & E Corp. filed bankruptcy protection on Tuesday, anticipating California forest fires, including a catastrophic 2018 fire that killed 86 people.
PG & E, which supplies electricity and natural gas to 16 million customers in northern and central California and employs 24,000 people, has promised to turn it on because it is struggling with fire related costs that it estimates at more than $ 30 billion.
"The power and the gas will continue … We will not go out of business and there will be no disruption in the services you expect from us," said interim director John Simon in a letter to customers.
The San Francisco-based owner of the largest US power company warned in November that it could run a significant liability over its insurance coverage if it turns out that the material caused the campfire that Paradise, California destroyed last year.
The fire broke out on November 8 and killed at least 86 people in the deadliest and most destructive forest fire in California's history.
State researchers had previously cleared PG & E's responsibility for a natural fire in the California wine country 2017, but the company is still facing dozens of lawsuits from owners of homes and businesses that have burned during those and other 2017 fires.
Reinsurance Company Munich Re called November & # 39; s Campfire & # 39; the world's most expensive natural disaster of 2018 and linked overall losses to $ 16.5 billion. Submitting for bankruptcy would protect PG & E against claims, giving it time to find out the next steps.
PG & E is looking for permission from the court for $ 5.5 billion in financing from the debtor owned by J.P. Morgan, Bank of America, Barclays, Citi and other banks. The sum is approximately equal to the annual expenses of PG & E.
PG & E listed assets of $ 71.39 billion and commitments of $ 51.69 billion as of September 30 in the voluntary Chapter 11 document filed with the US Bankruptcy Tribunal for the Northern District of California.
It has an indebtedness of more than $ 18 billion. Business advisors expect that it can take up to two years to go bankrupt.
PG & E shares, which lost three-quarters of the value of the 52-week high for the campfire, rose 6 percent to $ 12.74 in morning trading.
PG & E subsidiary Pacific Gas and Electric Company filed for bankruptcy in 2001.
BlueMountain Capital Management LLC said it would propose a slate of board members by February 21, and urged the stakeholders to support changes to the company. The hedge fund may be able to stand in line to participate in a share committee appointed by a supervisory judge.
PG & E also has to struggle with concerned suppliers.
Federal energy regulators said on Friday that they had joint jurisdiction with a bankruptcy court over requests for power contracts by canceling or renegotiating PG & E. It was a victory for electricity producers who supply PG & E with solar and wind energy, including NextEra Energy Inc.
Last year legislators gave PG & E permission to raise interest rates to cover natural fire losses from 2017 onwards. But elected representatives have shown little interest in new interest rate hikes or other maneuvers to prevent a bankruptcy petition.
(Reporting by Patnaik in Bengaluru and Jim Christie in San Francisco; Writing by Nick Zieminski Editing by Saumyadeb Chakrabarty and Meredith Mazzilli)
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