PG&E Judge Refuses to Back Wildfire Victims Push to Delay Votes

The judge overseeing PG&E Corp.’s bankruptcy refused to sanction a contentious request from lawyers who wanted to advise wildfire victims to withhold voting on the utility’s reorganization plan until they resolve concerns over a $13.5 billion settlement.

U.S. Bankruptcy Judge Dennis Montali said in an order late Tuesday that the request to send a court-approved letter to victims is “not appropriate” and that hundreds, if not thousands, have already voted on the settlement.

“It is beyond doubt that confusion will reign if the court permits the proposed letter to go out, leaving countless fire victims confused even more than they might be now,” Montali wrote.

The judge didn’t forbid lawyers from sending a letter advising victims not to vote yet. But if they do so it’s “without this court’s approval or disapproval,” he wrote.

The attorneys, who represent a committee designated to speak for wildfire victims in the bankruptcy, have been pushing for PG&E to guarantee the value of the half of the settlement to be paid through stock. Otherwise, they contend, the deal’s value will shrink as a result of the market downturn caused by the coronavirus pandemic.

The committee didn’t immediately return a request for comment.

The effort to ask victims to withhold their votes until negotiations with PG&E are finished has opened a rift between lawyers. While attorneys for the committee want to argue for a better deal from PG&E, lawyers for thousands of other victims have said they support the deal that’s already on the table.

The upheaval comes as PG&E is pushing to gain approval of its reorganization plan by June 30 so it can take advantage of a state wildfire fund that would provide financial assistance for any future wildfire claims. The California utility giant filed for Chapter 11 more than a year ago after its equipment was linked to some of the worst fires in state history, resulting in an estimated $30 billion in liabilities.

Read More: PG&E Victims Lawyers’ Squabble Could Slow Bankruptcy Exit

PG&E opposed asking fire victims to hold off on voting. A lawyer for the power company said in a hearing Tuesday that the proposed letter was misleading and the effort was a “blatant” attempt to renegotiate a deal they had already signed.

PG&E initially reached the $13.5 billion settlement with victims in December. The company has also negotiated multi-billion dollar settlements with insurance claim holders, local government agencies and bondholders. California Governor Gavin Newsom dropped his opposition to the company’s reorganization plan last month after PG&E agreed to put itself up for sale if it stumbles in its effort to exit bankruptcy.

The company’s shares rose 7.4% to $9.20 at 10:10 a.m. in New York.