PG&E Corporation: Wildfire Chapter 11 and $13.5B Fire Victim Trust

PG&E Corporation and its operating utility, Pacific Gas and Electric Company, filed chapter 11 petitions on January 29, 2019 in the U.S. Bankruptcy Court for the Northern District of California (San Francisco Division), under lead case number 19-30088 before Judge Dennis Montali. The filing was driven by potential liabilities exceeding $30 billion from the 2017 and 2018 Northern California wildfires, excluding punitive damages, fines, and penalties.

The case ran 17 months and was structured around four sequential restructuring support agreements (RSAs) that resolved insurance subrogation, wildfire tort, public-entity, and noteholder constituencies before plan confirmation. The Bankruptcy Court confirmed the plan on June 20, 2020, and the plan went effective on July 1, 2020 — one day after the statutory deadline imposed by California's Assembly Bill 1054 for participation in the Go-Forward Wildfire Fund. Funded debt of approximately $24 billion was paid in full or reinstated; wildfire claimants were channeled into a $13.5 billion Fire Victim Trust funded with cash and HoldCo equity; and prepetition equity holders retained their interests subject to dilution from new plan-related issuances.

Debtor(s)	PG&E Corporation and Pacific Gas and Electric Company (2 jointly administered entities)
Court	U.S. Bankruptcy Court, Northern District of California (San Francisco Division)
Case Number	19-30088 (lead)
Petition Date	January 29, 2019
Confirmation Date	June 20, 2020
Effective Date	July 1, 2020
Judge	Hon. Dennis Montali
Plan Type	Joint Chapter 11 Plan of Reorganization
DIP Facility	$5.5 billion senior secured (JPMorgan Chase Bank, N.A. as administrative agent; Citibank, N.A. as collateral agent)
Claims Agent	Prime Clerk, LLC

Wildfire Liabilities and the Path to Filing

The Utility provides natural gas and electric service to approximately 16 million customers across northern and central California and employed approximately 24,000 regular employees as of the petition date. As of September 30, 2018 the Debtors reported approximately $71.4 billion in assets and $51.7 billion in liabilities on a book-value basis, with the Utility operating under a CPUC-authorized capital structure of 52% equity and 48% debt and preferred stock.

Two clusters of fires drove the filing. The 2018 Camp Fire began near Paradise in Butte County on November 8, 2018, ultimately consuming 153,336 acres, killing 86 people, and destroying 13,972 residences, 528 commercial structures, and 4,293 other buildings. The 2017 Northern California wildfires — a series of 21 major fires that ignited beginning October 8, 2017 across Napa, Sonoma, Butte, Humboldt, Mendocino, Lake, Nevada, and Yuba counties — burned over 245,000 acres and killed 44 people.

The legal exposure was magnified by California's doctrine of inverse condemnation, which imposes strict liability on utilities for property damage caused by their facilities regardless of negligence findings. The First Day Declaration of Jason P. Wells stated that the CPUC could decline to authorize cost recovery for inverse-condemnation damages even where a court held the Utility liable, leaving the Debtors economically exposed without a regulatory backstop. The Debtors estimated their total wildfire-related liability could exceed $30 billion before any punitive damages, fines, or penalties.

As of January 11, 2019 the Debtors were aware of approximately 46 complaints representing at least 2,000 plaintiffs tied to the Camp Fire and approximately 700 complaints representing at least 3,600 plaintiffs tied to the 2017 wildfires. PG&E later pleaded guilty to 84 counts of involuntary manslaughter and one count of unlawfully starting the Camp Fire on June 16, 2020. The Utility was a repeat filer, having previously reorganized in Case No. 01-30923 following the 2001 California energy crisis.

Prepetition Capital Structure and Funded Debt Stack

As of the petition date the Debtors carried approximately $24 billion in outstanding funded debt across HoldCo and Utility silos. PG&E Corporation (HoldCo) had a $300 million revolving credit facility (fully drawn as of December 31, 2018) and a $350 million term loan maturing April 16, 2020. The Utility carried a $3 billion revolving credit facility, of which approximately $2.85 billion was drawn in revolving loans and approximately $80 million was outstanding in letters of credit, plus a $250 million term loan maturing February 22, 2019 — less than a month after the petition date.

The largest concentration of prepetition debt sat in the Utility's bond stack. The Utility had approximately $17.5 billion in aggregate outstanding principal of senior notes and approximately $860 million of pollution control bonds outstanding. Trade payables stood at approximately $2.1 billion as of January 28, 2019, the day before the filing.

The Noteholder RSA preserved par recoveries on the bond stack through reinstatement and exchange rather than impaired treatment, and the Ninth Circuit later addressed postpetition interest treatment for this debt in the solvent-debtor litigation.

$5.5 Billion DIP Facility and JPMorgan Syndicate

The Debtors entered chapter 11 with a $5.5 billion senior secured debtor-in-possession financing package split into three tranches: a $3.5 billion DIP revolving credit facility (including a $1.5 billion letter of credit subfacility), a $1.5 billion DIP term loan, and a $500 million DIP delayed draw term loan. JPMorgan Chase Bank, N.A. served as administrative agent and Citibank, N.A. served as collateral agent. The arranger group included J.P. Morgan Securities LLC, Merrill Lynch Pierce Fenner & Smith Incorporated, Barclays Bank PLC, Citibank N.A., BNP Paribas Securities Corp., Credit Suisse Loan Funding LLC, Goldman Sachs Bank USA, MUFG Union Bank N.A., and Wells Fargo Securities LLC.

Pricing on the revolving piece was LIBOR plus 225 basis points per annum, with the term loan and delayed draw term loan priced at LIBOR plus 250 basis points. A 2% default rate applied on overdue amounts. The facility carried original issue discount of 99.5 on the term loan and delayed draw term loan tranches, aggregate fees of approximately $95.25 million (about 1.7% of the total facility), and a maturity of December 31, 2020 with a one-year extension option subject to a 25 basis point extension fee. The DIP carried no financial covenants and no milestones tied to a sale or plan process. The interim draw was sized at $1.5 billion, with the remaining $4.0 billion available upon entry of the final order. The deadline for entry of the final DIP order was April 15, 2019.

The DIP also permitted the Debtors to use up to $4 billion of asset-sale and condemnation proceeds for general corporate purposes, with reinvestment rights for proceeds exceeding that amount. The U.S. Trustee filed an objection to the DIP motion, and the Official Committee of Tort Claimants and the SLF Fire Victim Claimants filed objections at Docket Nos. 800 and 804. The DIP financing was supported in court by the Kurtz declaration from Lazard. Commitment fees and structure ultimately stood notwithstanding the objections.

Multi-RSA Architecture and the $13.5 Billion Fire Victim Trust

The case was resolved through four sequenced restructuring support agreements that locked down each major creditor constituency before plan confirmation. The Public Entities Plan Support Agreements were entered June 18, 2019 with local public entities, settling their wildfire-related claims for $1 billion in aggregate. The Subrogation Claims RSA was executed September 22, 2019 between the Debtors and the Ad Hoc Group of Subrogation Claim Holders, resolving all insurance subrogation claims arising out of the 2017 and 2018 wildfires for $11 billion. The Tort Claimants RSA was executed December 9, 2019 between the Debtors, the Official Committee of Tort Claimants, and consenting tort claimants, reflecting a $13.5 billion settlement to fund the Fire Victim Trust; the Court approved the RSA on December 17, 2019. The Noteholder RSA was executed January 22, 2020, providing for $21.425 billion of prepetition notes and other Utility funded debt to be exchanged or reinstated; the Court approved that RSA on February 5, 2020.

The Fire Victim Trust was the central distribution vehicle for individual wildfire tort claims. The trust was funded with an aggregate nominal value of $13.5 billion, comprised of $5.4 billion in upfront cash, an additional $1.35 billion in deferred cash (without interest), and $6.75 billion in New HoldCo Common Stock representing at least 20.9% of fully diluted shares. Fire victims did not receive stock directly; the trust was designed to liquidate the equity stake over time and distribute cash to claimants. Tort claimants — together with the trustee and an ad hoc group of objectors — pressed for clarifying language on trust operations and claim assumption procedures via a joint statement filed at Docket No. 7851, and the Court ruled on objections to the trust documents on May 26, 2020.

The treatment by class reflected a solvent-debtor case at the funded-debt level and a settlement-driven case at the wildfire-tort level. Holders of HoldCo and Utility funded debt claims (Classes 3A, 3B, 4A, 4B) were paid in full with postpetition interest at the federal judgment rate, reinstated, or exchanged for new funded debt under the Noteholder RSA, satisfying creditors at par. Subrogation Wildfire Claimants (Classes 5A-I, 5B-I) received distributions from the $11 billion Subrogation Wildfire Trust. Public Entity Wildfire Claims (Classes 5A-II, 5B-II) were settled for $1 billion in cash. General unsecured claims were paid in full with applicable postpetition interest at the federal judgment rate. Holders of HoldCo common interests retained their interests subject to dilution from common stock or equity-linked securities issued under the plan, with rights-offering participation if implemented; Utility common interests were reinstated on the effective date.

The Ad Hoc Committee of Senior Unsecured Noteholders proposed an alternative plan that offered higher cash payments to fire victims, and the Official Committee of Unsecured Creditors supported terminating the Debtors' exclusivity — which the Court ultimately granted before the noteholders entered the Noteholder RSA in January 2020 and folded into the Debtors' plan. The UCC also pressed an objection at confirmation on issues of reinstatement, cramdown, impairment, postpetition interest, releases, exculpation, discharge, and classification, resolved through the confirmation process.

AB 1054, CPUC Approval, and the June 2020 Statutory Deadline

California Assembly Bill 1054, signed July 12, 2019, established a Go-Forward Wildfire Fund and conditioned utility participation on emergence from chapter 11 by June 30, 2020. Participation required PG&E to make an initial contribution to the fund of approximately $4.8 billion on the effective date, to make ongoing annual contributions of approximately $193 million, and to comply with CPUC safety certification requirements. The initial $4.8 billion contribution was paid at emergence on July 1, 2020.

The CPUC reviewed and ultimately approved the plan against AB 1054's framework. On May 28, 2020 the CPUC approved the plan of reorganization subject to safety, financial, and governance conditions, and the Bankruptcy Court confirmed the plan on June 20, 2020. California elected officials had earlier urged the CPUC to reject the plan, arguing that the post-emergence debt load could leave the Utility with sub-investment-grade credit metrics, and Bay Area mayors warned that PG&E risked a junk-bond credit profile at exit. The plan was approved by creditor classes in the May 2020 vote before confirmation.

Exit Financing and New Capital Structure

Emergence on July 1, 2020 was funded through a $9.75 billion exit financing package of new bank facilities, layered on top of approximately $22.7 billion in new debt issuances and the equity raise. The Debtors raised approximately $9 billion through one or more issuances of New HoldCo Common Stock or equity-linked securities, with a total emergence capital structure of approximately $47.1 billion across new credit facilities, new debt securities, and equity offerings. The exit debt component included $11.85 billion of new senior notes issued by the Utility (the New Utility Notes) along with new HoldCo debt, plus reinstatement and exchange of prepetition notes under the Noteholder RSA. Davis Polk & Wardwell LLP served as counsel to the exit financing lenders.

The equity raise relied on a private-placement and PIPE structure. PG&E entered a $3.25 billion common stock investment with multiple investors and amended its equity backstop commitments to simplify the capital raise, and Zimmer Partners separately committed $675 million through a PIPE agreement contingent on completion of the broader $5.75 billion equity offering. The Order Approving Plan Funding Transactions was entered June 11, 2020, clearing the way for the closings that occurred at emergence. The reorganized company announced a new 11-member Board of Directors on June 10, 2020, replacing most of the prepetition board, and Bill Smith was named interim CEO for the post-emergence transition.

Post-Confirmation Litigation: Cardelucci and Securities Claims

Holders of unsecured Utility funded debt argued that, because the Debtors were solvent and unsecured creditors were unimpaired under the plan, claimants were entitled to postpetition interest at their contractual or state default rates rather than at the federal judgment rate. The Bankruptcy Court initially ruled against the noteholders, following the Ninth Circuit's earlier decision in In re Cardelucci and limiting interest to the federal judgment rate.

On August 29, 2022 the Ninth Circuit reversed in a divided panel decision, holding that unsecured creditors of a solvent debtor are entitled to postpetition interest at their contractual or state-law default rates rather than the lower federal judgment rate, and that failure to pay the higher rate renders claims impaired for plan purposes. The court held that the common-law solvent-debtor exception was not abrogated by the Bankruptcy Code and remained applicable to unimpaired claims. The decision has been widely cited in subsequent solvent-debtor cases. The Bankruptcy Court also separately sustained PG&E's objection to a $11.8 million cure claim by Consolidated Edison Development, ruling that bankruptcy-triggered default claims were unenforceable and that PG&E had already satisfied required monetary defaults under the confirmed plan.

Securities class action. Securities-fraud claims by investors who purchased PG&E securities before the wildfires have continued to extend the case well past emergence. In September 2023 the Bankruptcy Court granted a motion to apply Bankruptcy Rule 7023 for class certification of unresolved securities claims, opening a path for class treatment of thousands of investor claims. In September 2024 the court ruled the securities claims facially sufficient under section 502(b), and a $100 million cash settlement was reached in District Court in January 2026 to resolve consolidated securities class actions for stayed class members.

A separate track of non-settling investors — the RKS Claimants — is pursuing active discovery in the District Court litigation, with a fact-discovery cutoff of June 19, 2026. The Bankruptcy Court denied PG&E's motion to stay the remaining securities claims on December 29, 2025, and on February 6, 2026 the court approved a stay tailored to claimants who participated in the District Court settlement. A status conference for the RKS active claimants is scheduled for March 3, 2026, and the deadline for the reorganized debtors to object to remaining U.S. government claims — including contested FEMA and Cal OES claims asserted at approximately $3.9 billion against the estate — is June 15, 2026. Judge Dennis Montali, who has presided over the case since the 2019 filing, noted his planned retirement at a January 20, 2026 status conference.

Fire Victim Trust director and officer claims. The Fire Victim Trust pursued litigation against former PG&E directors and officers for alleged breaches of fiduciary duty tied to wildfire liabilities, a further post-emergence litigation track alongside the solvent-debtor and securities proceedings.

Professional Retentions and Aggregate Fees

Total professional fees paid by and on behalf of the Debtors through the quarter ending June 30, 2021 were approximately $427.6 million, and total cumulative fees paid across all professionals (debtor and committee professionals) reached approximately $573.6 million. Weil, Gotshal & Manges LLP served as primary bankruptcy counsel; Cravath, Swaine & Moore LLP handled corporate and litigation work; Keller & Benvenutti LLP served as local co-counsel; and Munger, Tolles & Olson LLP provided regulatory counsel. Lazard Frères & Co. LLC served as investment banker, AP Services LLP served as financial advisor, and Prime Clerk, LLC served as claims and noticing agent. The retention support package included the Zumbro declaration in support of Cravath's application.

The committee professionals were anchored by Milbank LLP as counsel to the UCC, with FTI Consulting as financial advisor and Centerview Partners as investment banker; Milbank's final fee application sought approximately $28.3 million. Baker & Hostetler LLP served as counsel to the Tort Claimants Committee, with Lincoln Partners Advisors and Development Specialists serving as financial advisors. Epiq Corporate Restructuring served as information agent for both committees. The board of PG&E was represented by Simpson Thacher & Bartlett LLP in connection with emergence and the proxy contest, and PG&E's emergence work was led by Cravath on the corporate side.

Key Timeline

Date	Event
October 8, 2017	2017 Northern California wildfires begin (21 fires, 245,000 acres, 44 deaths)
November 8, 2018	Camp Fire begins near Paradise, CA (153,336 acres, 86 deaths)
January 29, 2019	PG&E Corporation and Pacific Gas and Electric Company file chapter 11
January 29, 2019	First day motions filed, including $5.5 billion DIP financing motion
February 12, 2019	Official Committee of Unsecured Creditors formed
March 8, 2019	Tort Claimants Committee and SLF Fire Victims file objections to DIP motion
June 18, 2019	Public Entities Plan Support Agreements executed ($1 billion settlement)
July 12, 2019	AB 1054 signed into law (Go-Forward Wildfire Fund)
September 9, 2019	Debtors file initial Joint Chapter 11 Plan
September 22, 2019	Subrogation Claims RSA executed ($11 billion settlement)
December 9, 2019	Tort Claimants RSA executed ($13.5 billion fire victim settlement)
December 17, 2019	Court approves Tort Claimants RSA
January 22, 2020	Noteholder RSA executed ($21.425 billion funded debt treatment)
February 5, 2020	Court approves Noteholder RSA
March 16, 2020	Amended plan and disclosure statement filed
May 28, 2020	CPUC approves plan of reorganization
May 27 – June 19, 2020	Confirmation hearing held across multiple days
June 11, 2020	Order approving plan funding transactions entered
June 16, 2020	PG&E pleads guilty to 84 counts of involuntary manslaughter
June 20, 2020	Confirmation order entered
July 1, 2020	Plan effective date; PG&E emerges from bankruptcy; ~$4.8 billion AB 1054 contribution paid
August 29, 2022	Ninth Circuit rules in favor of unsecured noteholders on solvent-debtor postpetition interest
September 2024	Bankruptcy Court rules securities claims facially sufficient under § 502(b)
December 29, 2025	Bankruptcy Court denies PG&E motion to stay securities claims
January 2026	$100 million securities class action settlement reached in District Court
February 6, 2026	Court approves stay for "Stayed Class Members" pending District Court settlement
March 3, 2026	Status conference for active securities claims (RKS Claimants)
June 15, 2026	Deadline for reorganized debtors to object to remaining U.S. government claims
June 19, 2026	Fact discovery cutoff for active RKS securities claimants

Frequently Asked Questions

Why did PG&E file chapter 11 in January 2019?

PG&E filed because of potential wildfire-related liabilities exceeding $30 billion stemming from the 2017 Northern California wildfires and the 2018 Camp Fire, which together killed 130 people and destroyed nearly 19,000 structures. California's inverse condemnation doctrine imposed strict liability on the Utility for property damage caused by its facilities regardless of negligence findings, and the CPUC could decline to authorize cost recovery.

What was the size and structure of the DIP facility?

The Debtors obtained a $5.5 billion senior secured DIP facility comprising a $3.5 billion revolving credit facility, a $1.5 billion term loan, and a $500 million delayed draw term loan. JPMorgan Chase Bank, N.A. served as administrative agent and Citibank, N.A. served as collateral agent. The facility carried no financial covenants and no sale or plan milestones.

How much did fire victims recover?

Individual fire victims received their recovery through the Fire Victim Trust, funded with an aggregate nominal value of $13.5 billion comprising $5.4 billion in upfront cash, $1.35 billion in deferred cash, and $6.75 billion in New HoldCo Common Stock representing at least 20.9% of fully diluted shares. Insurance subrogation claims were separately settled for $11 billion through the Subrogation Wildfire Trust.

What is AB 1054 and why did it matter?

Assembly Bill 1054 was a California statute signed July 12, 2019 that established a Go-Forward Wildfire Fund and conditioned utility participation on emergence from chapter 11 by June 30, 2020. Participation required PG&E to make an initial contribution of approximately $4.8 billion on the effective date and ongoing annual contributions of approximately $193 million.

Who is the claims agent for PG&E?

Prime Clerk, LLC serves as the claims and noticing agent. The firm maintains the official claims register and distributes case notifications to creditors and parties in interest.

What did the Ninth Circuit's solvent-debtor ruling decide?

On August 29, 2022 the Ninth Circuit held that unsecured creditors of a solvent debtor are entitled to postpetition interest at their contractual or state-law default rates rather than at the federal judgment rate, and that failure to pay the higher rate renders claims impaired for plan purposes. The decision has been widely cited as appellate authority on the solvent-debtor exception under the Bankruptcy Code.

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