Facing potentially devastating liabilities from California’s Camp Fire in November, Pacific Gas and Electric has dumped its CEO and, this morning, announced it will file for Chapter 11 bankruptcy protection. Yesterday, the company said CEO Geisha Williams, who headed the troubled San Francisco utility for less than two years, was stepping down immediately.
PG&E said it will file for Chapter 11 protection “on or about” Jan. 29. The company revealed its plans today in order to comply with a California law requiring companies to inform employees 15-days in advance of a bankruptcy filing. PG&E stock, which has already been hammered by the potential claims from the state’s most damaging wildfire ever and a series of 2017 wine country fires, fell 48% in early trading, before the markets opened in New York.
In a letter to customers, acting CEO John Simon, the company’s general counsel, wrote, “PG&E faces extensive litigation and significant potential liabilities resulting from these wildfires. It is clear that a solution is needed that enables the continued safe delivery of natural gas and electric service to our customers and supports the orderly, fair and expeditious resolution of PG&E’s potential liabilities resulting from the recent wildfires. We have determined that a Chapter 11 reorganization is the only viable option for meeting these goals.”
The combination gas and electric utility said, “We do not expect any impact to electric or natural gas service for our customers as a result of the Chapter 11 process. Likewise, we remain committed to helping those impacted by the wildfires through the recovery and rebuilding process, and these efforts will continue.”
Williams joined PG&E in 2007. She became the face of the company after it tried to deal with the fallout from the 2010 fatal explosion of a company gas pipeline in San Bruno, which incinerated a neighbor and killed eight. The company was convicted of a felony as a result.
Williams became CEO in March 2017. She earned $8.6 million in total compensation that year, according to the Wall Street Journal.
Williams raised the bankruptcy possibility last summer, when the state legislature was considering a bailout plan for the utility in the wake of the 2017 wildfires. The solons ultimately approved some protections for the company in September, just months before the Camp Fire struck.
PG&E is no stranger to Chapter 11. In 2001, facing some $9 billion in losses in electricity trading markets, due in part to the illegal operations of Enron Corp., PG&E filed for Chapter 11 protection. The company emerged from bankruptcy two years later, having paid off all its creditors in full. The Motley Fool investment web site commented in 2009, “There are some instances in which companies that file for bankruptcy don’t leave current shareholders penniless. PG&E (NYSE:PCG), for instance, filed for bankruptcy in early 2001. But after three years of restructuring, shareholders who held on throughout the process saw their investment triple in value.”
— Kennedy Maize