Despite the increasing uncertainty with regards to the financial hit to industries, Russell Group have modelled the exposure for companies and countries. In the first of these articles, we take a look at the impact on shipping.
Pacific Bankruptcy Fans the Flames of Litigation
25 November 2019 | Blog Post
Pacific Gas & Electric is under pressure to increase compensation to victims of the 2017-18 wildfires or face being taken over by State and Local Government in California.
The move, which is backed by Californian Governor, Gavin Newsom would see the utility company being turned into a customer-owned co-operative run by the state and local government.
This marks a defining moment for Pacific Gas, with the company filing for bankruptcy in January because it could not afford the estimated $30 billion in damages arising from the recent North Californian wildfires.
Instead the company is offering $11 billion in settlement, which has angered state and local officials.
This was part of the deal that Pacific Gas struck with insurers in September, which was below the $20 billion that was asked for originally.
Since the 2017 wildfires, Pacific’s company market value has collapsed by more than $30 million and its stock value has fallen by over 30% according to Associated Press
However, Pacific Gas are also facing an internal battle too, as a group of bondholders led by Pacific Investment Management and Elliott Management are seeking to take control of the company according to Bloomberg
The consortium has pledged $13.5 billion in cash for the wildfire victims. A battle that will continue long into 2020, as Pacific try to avoid the July 2020 deadline imposed by Californian lawmakers to avoid bankruptcy.
Pacific Gas’s role in the wildfire has been widely blamed on its poor infrastructure. For when the wildfires broke out, Pacific shut down power in order to protect their equipment from sparking any fires but also to protect their liability. This is a standard procedure that is replicated by many energy companies in California.
However, shutting down power meant that officials at Pacific struggled to send evacuation alerts across the region.
Furthermore, the fallout for Pacific continues as claims from the wildfires are still coming through such as the $10.5 billion in estimated liabilities from the 2018 Camp Fire that Pacific admitted was sparked by its faulty infrastructure.
A claim will have to be settled before any pre-bankruptcy claims.
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