Pacific Gas and Electric, facing billions of dollars in claims over the deadly 2018 Camp Fire, is headed to bankruptcy court.
PG&E, the state’s largest utility, said Monday it will file for bankruptcy on January 29, after a 14-day waiting period required by California law. It needs to use the bankruptcy process, which will allow it to shed some of its debt, to pay for damages and stay in business to provide gas and electric service to its customers.
Shares of PG&E (PCG) plunged 55% in initial premarket trading following the filing and was still down 40% shortly after 8 a.m. ET.
The company, in a public filing, cited at least $7 billion in claims from the Camp Fire. The wildfire caused 86 deaths and destroyed 14,000 homes, along with more than 500 businesses and 4,300 other buildings.
It is believed the fire was started when a PG&E power line came in contact with nearby trees. PG&E reported “an outage” on a transmission line in the area where the blaze began, about 15 minutes before it started. Within the massive burn area, PG&E found power equipment and a fallen power pole riddled with bullet holes, according to a letter it sent to regulators. The company also reported that it found a downed line with tree branches on it.
In addition, a series of wildfires in 2017, many of which were also blamed on PG&E, caused $10 billion in damages and 44 deaths. In 11 of those fires, state investigators found the company violated codes regarding brush clearance near its power lines or had made related violations.
PG&E said Monday that it has only about $1.5 billion in cash and cash equivalents on hand. It said it believes bankruptcy is “appropriate, necessary and in the best interests of all stakeholders, including wildfire claimants,” as well as other creditors, its shareholders and customers.
Shareholders are generally wiped out in the bankruptcy process. Shares of PG&E were already down 63% since the start of the Camp Fire.
On Sunday night the company reported that CEO Geisha Williams, who had been in the job less than 11 months, has stepped down. The company said it would look to hire a new chief executive with “extensive operational and safety expertise.”