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UPDATE: PG&E Corp. and its utility preparing to seek Chapter 11 bankruptcy

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UPDATE: PG&E Corp. and its utility preparing to seek Chapter 11 bankruptcy

PG&E Corp. and its utility-subsidiary Pacific Gas and Electric Co. plan to seek Chapter 11 bankruptcy protection in an effort to manage the fallout from the 2017 and 2018 Northern California wildfires.

The company has filed a 15-day advance notice that it and its subsidiary intend to seek Chapter 11 reorganization. Both PG&E Corp. and its wholly-owned utility, Pacific Gas and Electric Co., or PG&E, plan to file for reorganization on or around Jan. 29, the company said in a Jan. 14 release.

The reorganization is expected to help the utility resolve an estimated $30 billion in liabilities as a result of the recent wildfires while continuing to provide service to customers, the company said. PG&E had reportedly considered selling off its gas utility assets, which analysts said would not totally offset its liabilities.

"We believe a court-supervised process under Chapter 11 will best enable PG&E to resolve its potential liabilities in an orderly, fair and expeditious fashion," PG&E Corp. interim CEO John Simon said. Geisha Williams announced late Jan. 13 that she was stepping down from her role as CEO.

The company confirmed that it is in talks with potential lenders for debtor-in-possession financing. Based on "highly confident" letters from banks, PG&E Corp. anticipates securing about $5.5 billion in commitments by the time it files its Chapter 11 petitions. The funds would be used to support PG&E Corp.'s ongoing operations. As of Jan. 11, PG&E Corp. and PG&E held about $400 million and $1.1 billion, respectively, in cash and cash equivalents on hand.

The Chapter 11 process would not affect electric or natural gas service, and rehabilitation efforts in the wildfire-affected communities will continue as planned, PG&E Corp. said.

Weil Gotshal & Manges LLP and Cravath Swaine & Moore LLP are serving as PG&E's legal counsel, Lazard is serving as investment banker, and AlixPartners LLP is acting as the restructuring adviser.