Robert Julian, a lawyer for the wildfire victims, said in bankruptcy court on Tuesday that PG&Es settlement with the insurance-claims holders had become the elephant in the room in the bankruptcy. The claims holders have not attended recent mediation sessions, he said.

We cant resolve this case because theyve taken all the cash, Mr. Julian said.

Gov. Gavin Newsom has also come out against the deal with insurance-claim holders, calling it premature. If victims, PG&E and insurance-claim holders cannot come to an agreement, the State of California will present its own plan for resolution of these cases, lawyers for Mr. Newsom wrote in a recent legal filing.

Lawyers for insurance creditors have said their clients have given up a lot by agreeing to accept $11 billion for claims that originally totaled $20 billion. Any remorse that fire victims lawyers may feel for not moving more quickly and settling their claims is ultimately irrelevant to the bankruptcy courts decision about whether PG&E made the right call by settling with the insurance claim holders, the groups lawyers wrote in a Nov. 11 court filing.

Some California politicians are considering drastic measures. Sam Liccardo, the mayor of San Jose, has proposed turning PG&E into a customer-owned entity. All fire claims in bankruptcy would be paid in cash under that plan, according to Alan Gover, a lawyer who is working on it.

PG&E must emerge from bankruptcy by June in order to participate in a fund that California set up this year to shield the states largest utilities from future wildfire claims. If there is no settlement among PG&E, fire victims and other creditors by early next year, however, two other potentially lengthy trials are set to begin. These would decide the utilitys liability to fire victims with the help of a jury and expert witnesses.

While PG&E has repeatedly promised to pay all fire victim claims in full, bankruptcy experts say that troubled companies often find it difficult to do so, and that many victims are left with much less than they hoped for.

You kind of have to put in full in quotation marks, said Ralph Brubaker, a professor who specializes in bankruptcy at the University of Illinois College of Law.

Originally posted here:

PG&E Struggles to Find a Way Out of Bankruptcy - The New York Times