California Governor Gavin Newsom has asked a federal judge to delay signing off on PG&E Corp.’s $11 billion insurance claim settlement, saying the deal is premature.
In a filing Saturday, the governor raised issues with a proposed settlement of so-called subrogation claims that would see PG&E pay billions to holders of insurance claims tied to wildfires.
“Given the uncertainty related to the plan that will resolve these chapter 11 cases, and the possibility that the state will need to pursue its own plan, the Allowed Subrogation Claim Amount may be an impediment to confirmation of a plan of reorganization,” according to the filing. “It is simply too early to tell.”
PG&E agreed in September to pay the $11 billion to settle insurers’ claims from fires blamed on its equipment. The settlement with insurance carriers and investors puts to rest a dispute with a group holding about 85% of insurance claims PG&E faces from deadly blazes in 2017 and 2018. The coalition, which includes Seth Klarman’s Baupost Group LLC, has said it is settling its claim for less than the amount the members are owed.
The company won permission last month to extend a deadline to Nov. 20 for getting approval on the restructuring support agreement. A hearing is scheduled for Nov. 13.
The governor’s filing asks the court to “further adjourn” a hearing on the settlement so it can be reviewed in the context of a broader resolution of the company’s bankruptcy filing. “Adjournment will force the financial institutions holding Subrogation Claims to continue to negotiate and facilitate a global resolution of PG&E’s chapter 11 cases,” the filing states.