PG&E has been in the news A LOT lately. Between filing for bankruptcy, having a natural gas pipe explosion in San Francisco, being linked to many of the California wildfires that have occurred over the past decade, and having their stock triple on February 19, 2019, PG&E is a popular topic for discussion. With their uncertain future and bills that just keep piling up, is it worth it for California fire survivors to file a claim against PG&E?
The Differences Between Chapter 7 and Chapter 11 Bankruptcy
Most people are familiar with the term “bankruptcy,” but unless you’ve filed for bankruptcy or work in finance, you may not realize that there are various ways that a company can file for bankruptcy.
When thinking of bankruptcy, most people think of Chapter 7. We tend to be reminded of the furniture store that is going out of business and has a liquidation sale to get rid of all inventory to pay off the creditors. In this situation, the business tends to be past the point of reorganization and just needs to sell off assets to pay back as many debts from creditors and investors as they can before closing up shop.
Chapter 11 is commonly known as “rehabilitation bankruptcy” and doesn’t mean that the company is going out of business. This is the type that PG&E filed for. With this category, the company creates a new strategy concerning how they will run the business and how they plan to pay off debts and investors. For example, they may get rid of the old management team and hire a new members and changing how they plan on paying their bills (such as making lower payments over a longer amount of time).
Specifically to PG&E filing Chapter 11, thus far they have announced that they are planning to replace half of their ten member board of directors by May 2019. The top creditors of PG&E Corp – which include Bank of New York Mellon Corp., Citibank, Mizuho and Bank of America Corp. – plan to meet on February 26 to establish a manageable payment schedule and to address other pertinent issues.
It’s also important to note that their stock tripled since hitting an all time low on January 15 amid reports of fire lawsuits and bankruptcy. “The stock was last seen 15.4% higher to trade at $17.86, and is on pace to topple its 50-day moving average for the first time since early November,” stated Schaeffer’s Investment Research.
Yahoo Finance shares that this is do to Citigroup’s promotion of the stock on Tuesday, February 19. “Citi upped PG&E stock to ‘buy’ with a $33 price target, implying better than a 100% profit potential off of PG&E’s closing share price last week of $15.48.”
So while PG&E may have taken a huge hit earlier in the year, a lot of people are making a lot of money with these extremely profitable numbers.
PG&E, Chapter 11 Bankruptcy, and Fire Lawsuits
Since PG&E is not going out of business, what does filing for bankruptcy do to the existing and potential lawsuits that have been filed by thousands of wildfire survivors?
First of all, these lawsuits are not going away. Filing for bankruptcy will probably cause it to take longer for survivors to get what’s owed to them, but it certainly is worth filing a claim and waiting a little longer to get a pay out.
Secondly, this is isn’t the first time that a big industry has harmed the public and filed for bankruptcy. Let’s look at the case involving asbestos and the link to cancer. Since 1982, approximately 60 asbestos companies filed for bankruptcy due to the overwhelming numbers of people who suffered from mesothelioma (a type of cancer that develops from the thin layer of tissue that covers many of the internal organs, especially the lining of the lungs and chest wall).
Fortunately, these types of companies – including PG&E – have insurance to cover lawsuits.
For example, the Budd Company, which sold products containing asbestos, came under fire for causing cancer. They had insurance policies that provided $100 million in coverage for asbestos claims along with a conﬁrmed plan of reorganization. When these cases went to court, judgments were paid by either an insured asbestos claims fund or an uninsured asbestos claims fund. “The Budd plan also created an administrative fund to pay asbestos claims and related expenses, and provided that unspent amounts in the various funds would ﬂow into an asbestos springing trust, in the event the reorganized debtor dissolved,” explained Mealey’s Asbestos Bankruptcy Report. So although the company was in financial trouble, those who filed a claim still received compensation to help pay for medical bills, lost wages, and more.
Should I File a Claim Against PG&E?
This question has generated a huge discussion on social media, but the answer is YES, if your property was lost or damaged due to a fire that was linked to PG&E, you should file a claim. Here are some answers to common questions:
If PG&E is going bankrupt, do they even have any money to pay out to survivors?
Like the asbestos example, PG&E has insurance monies set aside for these types of lawsuits. While the payouts may not be as big as hoped for, there will likely be financial compensation for those who file a claim.
Will this increase PG&E rates for other Californians?
PG&E’s rates are going up regardless (check out their website to get details). From “high usage surcharges” to “Time of Use Rates,” PG&E has been planning rate increases since 2015. Rates will go up whether people file claims or not.
Will the payment be large enough to be worth the effort of filing a claim?
In these types of cases, damages are added up and PG&E will be required to pay a certain amount. Each person who filed a claim will be awarded compensation depending on their losses. Usually lawyers will charge a standard 33% fee for their services if the case finds in favor of the plaintiff. The results will be two-fold: 1) PG&E will be held accountable for their negligence and 2) you’ll receive money that you otherwise wouldn’t have to help rebuild.
How Do I File a Claim?
If your home or property was damaged or if you lost a loved one in the Camp Fire, Butte Fire, Tubbs Fire, or Thomas Fire, you may be able to file a claim against PG&E. Call Periscope Group today at (800) 511-3838. Our knowledgeable team will guide you through this process and will help you in any way we can.