Published: Mon, January 14, 2019
Markets | By Otis Pena

PG&E seeks bankruptcy protection; Newsom urges utility to 'honor promises'

PG&E seeks bankruptcy protection; Newsom urges utility to 'honor promises'

California's largest utility company said on Sunday its chief executive had resigned as the firm faces billions of dollars in potential liabilities tied to the state's deadly and destructive wildfires past year.

Debtor-in-possession financing is used by companies that have filed for Chapter 11 bankruptcy protection to help reorganize and turn the company around. He is replacing former CEO Geisha Williams, who resigned from both the holding company and the utility.

PG&E said in a letter to pensioners that it doesn't expect any changes to its tax-qualified pension plans, or to its life and health-insurance benefits.

Pacific Gas and Electric, facing billions of dollars in claims over the deadly 2018 Camp Fire, is headed to bankruptcy court.

PG&E, which serves 15 million Californians - nearly 40% of the population of the state - warned then it could face "significant liability" beyond its insured amount if its equipment was found to have caused the fire. "We believe John is the right interim leader for the company while we work to identify a new CEO".

The Camp Fire, the most deadly and destructive fire in state history, has yet to be assigned an official cause, but PG&E reporting having an equipment malfunction near the spot around the same time the fire ignited.

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The company said Monday that it has only about $1.5 billion in cash and cash equivalents on hand.

The departure of Williams, 57, was announced Sunday, hours before the company said it was notifying workers it could file for bankruptcy within weeks.

The company's board chose to oust CEO Geisha Williams and undergo a restructuring at a board meeting this weekend in San Francisco, according to a source familiar with the matter.

John Simon, who served as PG&E's executive vice president and general counsel, will now be the utility's interim CEO until the board finds a permanent replacement and said the utility's "single most important responsibility" is safety. The board concluded that a Chapter 11 reorganization "is ultimately the only viable option to restore PG&E's financial stability", according to the filing.

Williams knew the risks that she faced because of wildfires liabilities.

The announcement Monday follows the resignation of the power company's chief executive a day earlier. At an energy conference last year in Houston she said - jokingly - that if she failed to change a state law on wildfires, "I won't be here in two years".

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