PG&E Reportedly Eyeing Breakup, Bankruptcy In Wake Of Multiple Devastating Wildfires

PG&E Reportedly Eyeing Breakup, Bankruptcy In Wake Of Multiple Devastating Wildfires

Reports that PG&E weighing bankruptcy to overcome its potential liabilities from wildfires is drawing both concern and skepticism as California lawmakers mull a potential bailout for the embattled utility.

News of the possibly bankruptcy filing sent shares of PG&E plummeting in after-hours trading on Friday.

A bankruptcy filing is not certain, the sources said.

The California legislature is scheduled to reconvene today after its holiday break.

State fire investigators blamed the utility's power lines for causing several wildfires in October 2017. The company could be engaged in similar brinkmanship now, he said. "You can't trust what they say". Lawmakers were in talks late a year ago for legislation to protect the company from liabilities related to the 2018 fires.

In a statement late Friday, PG&E said it's "working diligently to assess the company's potential liabilities as a result of the wildfires and the options for addressing those liabilities".

The company didn't immediately reply to an email seeking comment on Monday.

PG&E shares have plunged almost 50% since November 8, when the deadliest and most destructive wildfire in California history broke out.

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The brief was filed after U.S. District Court Judge William Alsup requested officials determine what crimes PG&E may have committed if it was found responsible for the fires.

It said its board of directors is engaging outside experts for advice on wildfire safety, but it did not identify any potential plans to address liability or safety. It would extend legislation that allows PG&E to issue bonds to pay off the costs tied to the 2017 blazes.

Earlier last month, the California Public Utilities Commission (CPUC) opened a proceeding to consider penalties against the company, ordering immediate action against the utility for falsifying safety documents for natural gas pipelines.

The lawsuits filed by Allstate, State Farm, USAA and their subsidiaries come on top of several other cases filed by victims of the Camp Fire, which devastated the towns of Paradise, Magalia and Concow north of Sacramento after it started November 8.

Citing "people familiar with the matter", Reuters reported PG&E was also considering filing for bankruptcy protection for some or all of its businesses.

However, Guggenheim Partners analyst Shahriar Pourreza said bankruptcy will not be the best option as PG&E is too big an utility in California.

"Without adequate political and regulatory support, we can not rule out a Chapter 11 filing", Christopher Turnure analyst at J.P. Morgan said in a note.

Konolige, meanwhile, wouldn't rule out what he called a strategic bankruptcy.

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