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PG&E Fails Attempt at Avoiding Billions of Dollars in Insurance Liabilities

Bankruptcy court rules that PG&E will have to pay as the utility company faces a bankruptcy takeover

By Evan Symon, November 30, 2019 2:05 am

PG&E will be held accountable for the $11 billion settlement they had agreed to with insurance companies ruled a bankruptcy judge Wednesday.

Inverse Condemnation

U.S. Bankruptcy Court Judge Dennis Montali held up the legal principle of ‘inverse condemnation’, which holds companies liable for damages because they owned the building or equipment that caused it. In PG&E’s case, since they owned the power infrastructure that caused the 2017 Tubbs Wildfire, among others, they’re liable for all insurance claims. As PG&E agreed to a $11 billion settlement over the loss of property with insurance companies, they’re legally bound to pay no matter what. And additional $30 billion in liabilities, such as those covering the dozens of deaths and the destruction of thousands of buildings during the 2018 Camp Fire, could also be bound to the utility company.

The number of liabilities coming from the Camp Fire had pushed PG&E into bankruptcy earlier this year. Following that and a subsequent fall in the value of the company, PG&E became more careful and started to shut down power in areas they though there might be a wildfire risk in. However this only worsened the companies position, as massive public outcry and the power shutoff hurting millions of people both financially and physically took its toll. Large cities such as San Jose are currently trying to leave or buy up PG&E  assets to form their own power company. The state of California has given an ultimatum that if PG&E doesn’t improve soon that they’ll be taken over by the state in June.

Mounting takeover bids

By siding with the victims, Judge Montali sets a large precedent for any future massive wildfire caused by a large company and made it clear that any higher court, including the California Supreme Court, would say the same thing. The ruling also keeps the main hurdle for getting out of chapter 11 bankruptcy in place, as the tens of billions of dollars of liabilities has proven to be a tough issue to negotiate.

In addition to the looming threat from the state, PG&E is also facing a takeover threat from the Elliott Management Group, a New York Securities company, who is currently offering more money to wildfire victims than PG&E. Potential bids from other companies are also expected, but most likely not as many as before because of the growing number of liabilities being held against the company.

“At least they’re going to be paying for it now.”

“I see it as justice,” said Terri O’Rourke, who was friends with two Paradise, California residents who died in the Camp Fire. “They had caused the … fire, ruined so many lives. I’m never going to see my friends again. I can’t begin to tell you how many people are still grieving, or how many had to go to therapy. I know people who bet sick just by writing PG&E a check for their electric bill because they’re paying the same people caused their wife or husband to die.

But when they tried to weasel out of it, they were stopped.

This won’t bring anyone back or make Paradise how it once was, but they’re at least they’re going to be paying for it now.”

The bankruptcy proceedings are expected to continue in San Francisco well into next year. There is no current set timeline for victim payments.

Evan Symon

Evan V. Symon is the Senior Editor for the California Globe. Prior to the Globe, he reported for the Pasadena Independent, the Cleveland Plain Dealer, and was head of the Personal Experiences section at Cracked. He can be reached at evan@californiaglobe.com.
Evan Symon
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4 thoughts on “PG&E Fails Attempt at Avoiding Billions of Dollars in Insurance Liabilities

  1. ‘“I see it as justice,” said Terri O’Rourke, who was friends with two Paradise, California residents who died in the Camp Fire. “They had caused the … fire, ruined so many lives. I’m never going to see my friends again. I can’t begin to tell you how many people are still grieving, or how many had to go to therapy. I know people who get sick just by writing PG&E a check for their electric bill because they’re paying the same people caused their wife or husband to die.’
    I just want to sit down and cry for two hours after reading that. And it didn’t have to happen, it shouldn’t have happened.

    1. Thank you from another Camp Fire survivor who lost much, and two friends as well. And it could have been so easily prevented if maintenance had been performed on a 100 year old high voltage line.

  2. How about all the money that the State of California FORCED PG&E to spend on “alternate” sources of energy (i.e. wind and solar) rather than upgrading infrastucture. That money wisely spent could saved the lives and property of these people.

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