PG&E Corp CEO Geisha Williams, who had been in the job less than 11 months, is stepping down as increasing pressure from crushing liabilities connected to calamitous wildfires have driven the California utility to make arrangements to file chapter 11 bankruptcy.
Williams, who took control of the power and natural gas supplier to millions of California customers in March 2017, will be temporarily replaced by General Counsel John Simon. She likewise stepped down from the board of directors of both PG&E and its utility auxiliary, Pacific Gas and Electric Co.
“While we are gaining ground as an organization in safety and different areas, the Board realizes the huge difficulties PG&E keeps on confronting. We trust John is the correct temporary leader for the organization,” PG&E Chairman Richard Kelly said in an announcement. “Our pursuit is centered around broad operational and security aptitude, and the board is resolved to additionally change at PG&E.”
PG&E has been dealing with the November Camp fire that started in the California mountain town of Paradise and burned through the town, ultimately ending the lives of 86 individuals in the deadliest and most damaging wildfire in state history. The company, in a public filing, cited at least $7 billion in claims from the Camp Fire.
The utility faces massive lawsuits, investigations by the government and liabilities that could possibly add up to $30 billion
As has been projected, when factoring in the damage and harm from last year’s fire as well as the wildfires in 2017.
PG&E has been experiencing quite a bit of pressure from the California Public Utilities Commission to roll out operational improvements. The utility reported on Jan. 3 that it was evaluating its basic options and searching for new executives highly experienced in safety measures.
The administration shake-up comes as PG&E has been negotiating with banks for a multibillion-dollar insolvency financing deal to help operations amid liquidation procedures. The utility plans to inform workers of its arrangements for potential Chapter 11 court proceedings.
PG&E, which has debt in excess of more than $18 billion, will soon reveal their massive financial liabilities that resulted from the November wildfires.
State law requires PG&E to inform workers no less than 15 days before any bankruptcy filing.
Bankruptcy proceedings for PG&E represents a “last shot” if the organization can’t get a government bail-out that would enable it to pass on the costs of liabilities to its customers. Such a move instituted into law would enable PG&E to financially deal with the 2017 wildfires. California legislators have not yet moved to change laws that would give PG&E comparable options for the 2018 wildfires.
PG&E stated back in November it could be up against “significant liability” in excess of its insurance converge if its equipment was found to have caused Northern California’s Camp fire.
It is believed the fire was started when a PG&E power line came in contact with nearby trees.
Both Moody’s and S&P have cut PG&E’s FICO score into a junk rating, referring to the difficult situation the power supplier is facing connected to the fires and the need for assistance from state government.
Organizations arrange debtor-in-possession loans, regularly with existing moneylenders, when they are truly thinking about bankruptcy protection so they can proceed with operating their business while working through court procedures.
PG&E’s chapter 11 financing, should it be required, could amount to between $3 billion and $5 billion.
In the event that it looks for chapter 11 protection, the new cash would be crucial for PG&E, which spends around $6 billion every year.
What do you think PG&E should do about it’s wildfire liability?