According to news reports in the United States, the San Francisco utility company PG&E Corp could be headed towards bankruptcy because the company is facing possibility of liability for recent California wildfires worth billions of dollars. The organization has almost 16 million customers in central and northern California and the CEO of the company had stepped down last week. Reports said that the almost 20000 employees of the company would be informed very soon about the developments.
The stepping down of Geisha Williams as the CEO of the company was announced late on Sunday evening after his resignation from the boards of directors of both the utility and its holding company. The interim CEO for the company would be John Simon. Working with the company since 2007, Simon has adorned the role of executive vice president and general counsel of the company since 2017.
Reports published in the US suggested quoting sources that the company was holding negotiations with bankers and lenders in relation to a possible $5 billion aid package that could potentially be related to a Chapter 11 bankruptcy filing.
According to a report in the online edition of the San Francisco Chronicle, companies in the state need to mandatorily inform its employees about a possible bankruptcy or any other changes that are being planned in the controlling and ownership of the company at least 15 days prior to such a plan being implements according to a new state law which was implemented only recently.
Pacific Gas and Electric is a subsidiary of PG&E Corp and in 2001, it had also applied for bankruptcy and it took three years for the company to get out of Chapter 11 reorganization. According to reports, any pending bankruptcy filing could include the PG&E Corp., the subsidiary or both.
There were no comments available from PG&E.
The credit rating of the company were lowered to two notches below the investment grade threshold at single-B by S&P Global Ratings which impacted outstanding bonds worth about $18 billion and a drop of 22 per cent in the shares of the company at Wall Street.
Investors of the company were warned by PG&E in November that the company could potentially be held liable for a significant amount in addition to its insurance capacity if it was concluded that the deadly Camp Fire that started in the city of Paradise and spread through nearby communities was sparked because of its equipment. At least 68 people were killed in the fires and resulted in economic and environmental damage worth billions.
Since the fire, there has been a drop of more than two thirds in the share value of PG&E.
The reports also said that the bankruptcy would not have any impact on the services that are offered by the company to its customers and payments and salaries of the employees would continue to be paid.
According to the report in The Chronicle, California Sen. Jerry Hill, D-San Mateo was reported to have said that he had heard on Friday from “someone within our government” that preparations were being made by the company to file the 15-day bankruptcy notice as is mandatory by law.
The story also quoted Hill as saying, “I’m skeptical of just about anything PG&E says or does. What’s their endgame? They could be notifying their employees of bankruptcy in order to scare the legislature into taking some action or the state into offering a loan of some kind or a bailout of some kind.”
(Adapted from TheStreet.com)