On January 29th, PG&E Corporation and its regulated utility subsidiary, Pacific Gas and Electricity Company (collectively, “PG&E”), commenced bankruptcy cases in the Bankruptcy Court for the Northern District of California. Here are nine things to watch for in the PG&E bankruptcy.
- REPLACE THE BOARD? In the wake of PG&E’s announcement to file bankruptcy, certain equity holders are pushing to replace the board of directors at the upcoming annual shareholder meeting.
- POST-PETITION WILDFIRES? Claims arising from wildfires occurring after bankruptcy (and the treatment of those claims) may have a material impact on the direction of the case.
- JURISDICTION FOR PPA REJECTION? PG&E has commenced an adversary proceeding seeking a determination that only the bankruptcy court has jurisdiction over the rejection of power purchase agreements, rejecting FERC’s position that it has a seat at the table.
- WITHDRAW THE REFERENCE? There are a variety of grounds on which the district court could withdraw the reference, including the pending criminal proceedings against PG&E.
- DIP FINANCING. PG&E seeks $5.5 billion in secured DIP financing.
- WHICH PARTIES WILL DRIVE THE CASE? PG&E’s bankruptcy involves various political and regulatory players, in addition to the typical parties in interest.
- MULTIPLE OFFICIAL COMMITTEES? Certain constituencies (including equity holders) will likely seek the appointment of various official committees.
- IMPACT ON CRIMINAL PROCEEDINGS? PG&E faces ongoing investigations by regulators and lawmakers into its management, safety practices, and potential violations of the utility’s probation agreement.
- HOW EXPENSIVE WILL THIS BE? PG&E’s bankruptcy will come at a high cost. In its prior bankruptcy, the company incurred nearly $400 million in legal fees, financing expenses and other costs.