On Monday, in an effort to reach a deal, PG&E increased the amount it is willing to pay to settle fire claims to $25.5 billion, up from $18.9 billion.
But it’s not clear whether that will satisfy all parties. While the fire victims and the insurance-claim holders have the biggest claims against the company, others are also fighting to maximize their share of the $25.5 billion. Federal, state and local agencies say they are owed some $7.5 billion for fighting fires started by the utility’s equipment, taking care of victims and other costs.
Another big point of contention is how those claims will be paid. Under earlier proposals, holders of insurance claims, many of which were bought by hedge funds, would have gotten $11 billion in cash. But other claimants, including the wildfire victims, would have been paid almost entirely in stock of the new, reorganized PG&E. But since stock can lose value, many people and organizations would prefer cash.
Robert Julian, a lawyer representing the wildfire victims, said in bankruptcy court on Tuesday that PG&E’s 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.
“We can’t resolve this case because they’ve 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 mutual 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.
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.