PG&E Plans to File for Bankruptcy, Lawsuits Not Affected

Jan. 15, 2019

Facing liabilities of up to $30 billion from the 2017 and 2018 California wildfires, Pacific Gas & Electric (PG&E), the largest utility in California, announced its plans to file for Chapter 11 bankruptcy protection. Despite the planned upcoming bankruptcy filing, lawsuits filed by victims of the Camp Fire (also known as the Paradise Fire) against PG&E will still go ahead. Those suits will move to bankruptcy court as all state court litigation is automatically stayed by the bankruptcy. PG&E could also face murder or manslaughter charges if it is found responsible for the fire.

PG&E Faces Potential Liabilities of $30 Billion

PG&E estimates its liabilities for the 2017 and 2018 California fires could reach as high as $30 billion. Facing possible fines, numerous lawsuits and the potential for future wildfire claims, the utility said Chapter 11 bankruptcy protection was its only option. It reportedly plans to file on or around Jan. 29.

Following news of PG&E’s plans to file for Chapter 11 protection, the company’s stock plummeted 52 percent. Combined with earlier drops in value, PG&E stock has dropped more than 80 percent in three months, according to reports. CNBC notes that in 2017, PG&E’s market value reached a peak of more than $36 billion. That market value currently sits at around $4.7 billion.

PG&E serves gas and electricity to the northern region of California, with approximately 16 million customers.

Utility Liable in 2017 PG&E Fires

Although Cal Fire has not assessed blame for the 2018 California wildfires, it did determine the utility was responsible for at least 17 of the state’s 2017 fires. PG&E has also acknowledged that it experienced an equipment malfunction in an area believed to be the ignition point for the 2018 Camp Fire only moments before the fire began.

Since the 2010 San Bruno pipeline explosion—for which PG&E faced criminal allegations linked to not adequately maintaining its pipeline system—the company has been placed on probation and faced scrutiny regarding its safety record. A recent filing by officials accused PG&E of misleading regulators about its safety practices and falsifying records for five years.

Judge Plans to Chaperone PG&E

US Federal Judge William Alsup, who is overseeing PG&E’s probation following the pipeline explosion, proposed adding additional conditions to the utility’s probation noting that PG&E had been convicted of “knowingly and willfully violating safety standards and obstructing an investigation.”

Writing that the imposed probation conditions were intended to reduce the number of PG&E wildfires in the 2019 California wildfire season to zero, Alsup ordered PG&E to re-inspect its entire electrical grid and to de-energize any part of the grid not rated safe for wind conditions.

“This will likely mean having to interrupt service during high-wind events (and possibly at other times) but that inconvenience, irritating as it will be, will pale by comparison to the death and destruction that otherwise might result from PG&E-inflicted wildfires,” Alsup wrote in his order.

PG&E Lawsuits Will Go Ahead

The utility faces a variety of lawsuits following the Paradise wildfire that killed more than 80 people and became the most destructive and deadly wildfire in the state’s history. Fire victims and insurance companies have filed lawsuits alleging liability in the PG&E fire, arguing the utility failed to properly maintain its system and that failure resulted in the wildfire.

Though plaintiffs in PG&E California lawsuits may be concerned about how the bankruptcy affects their claims, the utility has substantial assets—reports indicate it has as much as $70 billion in assets and an income stream of $1 billion annually—and plaintiffs have political support. California Senator Jerry Hill has said that any reorganization should protect ratepayers and victims before others. Lawsuits will not end because of the PG&E bankruptcy protection; rather they will be moved to bankruptcy court.  

This would not be the first time PG&E has filed for bankruptcy. In 2001, PG&E reorganized and negotiated a rate increase. Unlike the PG&E 2001 bankruptcy, this time the company has the fatal San Bruno explosion and the 2017 and 2018 wildfires in its recent history, all of which have been linked or could be linked to PG&E’s maintenance issues.

California Wildfire Attorneys

If you or a loved one was harmed by the recent California wildfires, you need a highly skilled, experienced attorney who can help you maximize your recovery against PG&E.

We are committed to holding the utility accountable for its actions and will fight tirelessly to ensure you receive the compensation you’re entitled to. Our attorneys have extensive experience fighting against large corporations and will not back down from obtaining justice for you.

Contact our Sacramento and Oakland wildfire attorneys today for a free consultation find out how we can help you in your California wildfire claim.

We are no longer able to accept the following cases

Kincade Fire (2019)
Camp Fire (2018)
North Bay Fires (2017)
Ghost Ship Fire (2016)
Butte Fire (2015)

Personal injury and civil justice attorney Brooks Cutter is a leading advocate for consumer justice and protecting the rights of the severely injured. Brooks founded Cutter Law, P.C., with offices in Sacramento and Oakland, with…
Scroll to Top