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Judge strips PG&E Corp. of exclusive control to plan reorganization

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Judge strips PG&E Corp. of exclusive control to plan reorganization

A bankruptcy judge has terminated PG&E Corp.'s exclusive right to plan its reorganization, allowing a rival Chapter 11 proposal to proceed.

The alternative proposal, offered by a group of major utility bondholders, calls for a reorganization plan that would include a $14.5 billion compensation for wildfire victims. The bondholder group includes Elliott Management Corp., Deutsche Bank Securities Inc., Oaktree Capital Management LP and Pacific Investment Management Co. LLC.

PG&E Corp. previously blasted the rival offer, saying it is "a blatant attempt to unjustly enrich the noteholders who proposed it." Current PG&E Corp. shareholders will end up with a tiny share of the company if the alternative proposal pushes through, according to The New York Times.

PG&E Corp. filed its reorganization plan in September. It proposes to cap the debtors' wildfire liabilities linked to Pacific Gas and Electric Co.'s infrastructure at almost $18 billion, including $8.4 billion for the insured losses of individuals and public entities, $8.5 billion to reimburse insurance companies for insured losses and a $1 billion settlement with local governments.

"A dual-track plan course going forward may facilitate negotiations for a global resolution and narrow the issues which are in legitimate dispute," said Judge Dennis Montali of the U.S. Bankruptcy Court for the Northern District of California in granting the motion to terminate the exclusivity period.

PG&E and its utility subsidiary must exit bankruptcy protection by June 30, 2020, to gain access to a $21 billion state fund to pay for future catastrophic wildfires.

"One plan emerging as confirmable is a very acceptable outcome. And if both plans pass muster, the voters will make their choice or leave the court with the task of picking one of them," Montali added.