Bankruptcy and Financial Restructuring

Running on Empty: Why Pacific Gas and Electric Filed for Bankruptcy

2/8/2019 | Article

By: Rachel H. Ginzburg, Warren J. Martin Jr, Rachel A. Parisi

 

On Jan. 29, Pacific Gas and Electric Co. (PG&E) filed for bankruptcy protection in California pursuant to Chapter 11 of the United States Bankruptcy Code. PG&E is the nation’s largest utility. It employs 24,000 people (15,000 of whom are subject to collective bargaining agreements) at a payroll expense of $4.8 billion annually and serves 16 million customers. It has $24 billion of outstanding funded debt. Despite the size of these numbers, the evidence available as of the date of this article reflects that PG&E was operating on a financially sound basis. As of Sept. 30, 2018, PG&E reported $71.4 billion in assets and $51.7 billion in liabilities on a book value basis. So what happened? What led to the bankruptcy?

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