As many as 100,000 California residents who lost property, jobs and loved ones in fires linked to PG&E Corp. will get their day in court. It will be in bankruptcy court, where rules shield the utility giant from potentially crippling jury payouts.
PG&E isn’t broke. It is following the survival strategy used by other troubled companies to put a lid on damage claims. For victims, that amounts to a loss of negotiating power and likely means a fraction of the compensation they might receive in a jury trial.
California investigators have connected PG&E equipment to fires that killed more than 100 people, destroyed 26,000 buildings and burned at least 330,000 acres in 2017 and 2018. Lawyers for fire victims estimate that the utility, which filed for chapter 11 bankruptcy protection in January, is liable for as much as $54 billion in wildfire claims.
Before filing, PG&E told investors its fire-related liabilities could total more than $30 billion. The company is now offering $20.4 billion to cover all damages, including reimbursement to insurance companies. Of that, $7.5 billion is for residents and business owners hurt by the fires.
then the company’s chairman, said bankruptcy was “the only viable option to address the company’s responsibilities to stakeholders.”
PG&E’s financial statements at the time it filed for bankruptcy showed the utility was solvent, with assets exceeding liabilities. The company’s most recent annual report, filed in February, showed nearly $77 billion in total assets, including properties that could be used as collateral for loans—enough to cover $17.7 billion in debt and the $30 billion it estimated for fire claims. PG&E says it will pay all it owes.
Bankruptcy rules are designed to give troubled companies a fresh start by allowing them to negotiate with creditors rather than answering to a jury. Wildfire victims are considered creditors owed a debt by the utility.
Lawyers for PG&E and fire victims say there are between 70,000 and 100,000 people eligible to file wildfire claims against the company. Other companies that have sought chapter 11 survived waves of lawsuits filed by victims of asbestos and silicon breast implants, among others.
The amount that fire victims are owed will be decided in a proceeding known as an estimation. Only a handful of them will get the chance to testify about their harm. Unless there is a settlement, a federal judge will decide how much PG&E must set aside for fire damage.
In the estimation hearings, lawyers for the utility will try to reduce the compensation sum; lawyers for victims will seek more. Another judge, who is overseeing the bankruptcy, will be asked to approve a reorganization plan that frees the utility of liability.
“I would love to get back what it’s cost me,” said
a 78-year-old retired jockey whose home burned in 2017. “But you know how it is when you fight these big companies—they’ll wait you out until you die.”
Mr. Rinaldi estimates PG&E owes him roughly $200,000, the amount he spent on the new mobile home he shares with his wife, Betty Record, 83, in Marysville, Calif. His estimate is over and above the $90,000 he received from the couple’s homeowners insurance.