Written on behalf of Brian Kabateck
February 22, 2019
Following the lawsuits from the California wildfires in the last two years and after months of speculation, PG&E, one of the nation’s biggest utilities companies, has filed for Chapter 11 bankruptcy. In Chapter 11, a company is protected from creditors as it reorganizes its debt. What does this mean for consumers? For starters, the company plans to keep operating, which means that customers will still have power and gas. ABC 7 San Francisco states that it’s still unclear if customers rates could either raise significantly, or decrease. Bankruptcy could affect wildfire victims seeking damages because the filing places a hold on lawsuits against PG&E. Many Camp Fire victims have already sued PG&E alleging negligence and health and safety code violations by the utility. But this isn’t the only time the utility giant has filed for bankruptcy.
According to CNN Money, in 2001, PG&E filed for bankruptcy protection from creditors because of unreimbursed power costs that ran more than $300 million a month. The company was $9 billion deep in debt, and in 2004, their protection ended. Although it was able to pay off its debt, the fallout added to power bills for many years, impacting customers.
More than 35 lawsuits have been filed on behalf of families that were impacted by the Camp Fire. PG&E admitted its electrical lines were experiencing problems when the fire started last November. It became the deadliest wildfire in California’s history, killing more than 86 people, burning down fourteen thousand homes and destroying the town of Paradise. Through bankruptcy, the company would continue to operate and sell assets to obtain cash for settlements. According to the article, “5 Things to Know About the PG&E Bankruptcy” from KQED News, after a company goes bankrupt, the first to be paid off are the banks, then secured and unsecured creditors. Experts worry that after all that is paid off, there won’t be any money left to pay people who can potentially win the lawsuits.
In order to help alleviate these issues, PG&E implemented a new 2019 Wildfire Safety Plan which outlines the measures it plans to take to prevent its electric power lines and other infrastructure from sparking wildfires. Those measures include efforts to clear and trim vegetation near power lines as well as inspect and monitor its electrical system. The biggest impact to its customers is expected to come when more than 5 million customers could have their power shut off during windy and dry weather for safety reasons when there is risk of fire danger, though the company is likely to shut off power to those in high risk fire areas. Hopefully, this new plan will reduce the risk of future wildfires, that is taking the lives and homes of many.
According to the San Francisco Chronicle, half of PG&E’s board of directors are being replaced in the next few months. In its statement, the PG&E board said it recognizes that the company must “re-earn trust and credibility with its customers, regulators, the communities it serves and all of its stakeholders” and is “continuing to make changes that reinforce PG&E’s commitment to safety and improvement.” The company hopes their new leadership will guide them in the right direction and help them in their critical areas.
California has experienced devastating wildfires across Northern and Southern California. It could take years for Butte County to rebuild in the town of Paradise where nearly fourteen thousand residents lost their homes following the November 2018 Camp Fire. Those who want to rebuild face a daunting task of filling out paperwork to collect insurance money, getting their land cleared and obtaining permits to rebuild.
Kabateck LLP represented more than 2,500 homeowners who suffered damage to their homes as a result of the 2009 Station fires. Farmers Insurance systematically and in bad faith either refused to pay valid claims or severely underpaid valid claims as a result of damages from these fires. KBK successfully litigated hundreds of cases, stemming from fires in 2007, 2008, and 2009.