(Bloomberg) -- Victims of wildfires blamed on PG&E Corp. voted to approve a reorganization plan crafted by the California power giant, clearing one of the last hurdles in the company’s effort to exit the largest utility bankruptcy in U.S. history.
More than 85% of fire victims who cast ballots voted in favor of PG&E’s plan that includes a $13.5 billion settlement to fund claims filed on behalf of an estimated 70,000 families and businesses devastated by the some of the worst blazes in California history, according to a court filing Friday. PG&E needed to win support from two-thirds of those who cast a ballot.
PG&E said nearly all creditor classes overwhelmingly voted in favor of its restructuring plan. The only dissenting class was a group holding securities claims against the company.
“The acceptance of the plan of reorganization by wildfire victims and other voting creditors and shareholders is an important milestone in our financial restructuring process, moving PG&E one step closer to compensating fire victims and emerging from Chapter 11 as a stronger, financially sound company positioned for long-term success,” PG&E CEO Bill Johnson said in a statement Friday.
The approval comes despite opposition from some fire victims to the settlement, which will be funded in part by PG&E shares. Three members of a committee designated to represent victims in the bankruptcy resigned in protest over the proposal, calling into question whether their financial recovery should be tethered to PG&E stock.
In addition, some victims and their attorneys claimed a lawyer representing the largest group of fire victims has a potential conflict of interest that tainted the voting process. U.S. Bankruptcy Judge Dennis Montali denied a motion to contest the vote, saying a complaint that the bankruptcy rules were violated was unfounded.
The judge will take the vote into consideration when he decides whether to approve the reorganization plan.
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PG&E filed for Chapter 11 in January 2019 with an estimated $30 billion in liabilities tied to fires in 2017 and 2018. The company has agreed to settle claims for $25.5 billion with individual victims, insurers and public agencies. It also settled with a group of bondholders who tried unsuccessfully last year to take control of the company.
Fire victims are the only group whose compensation will be funded partly through shares.
PG&E is racing to win court and regulatory approval of its restructuring plan ahead of a state deadline of June 30. Meeting that goal will allow the company to participate in a California wildfire insurance fund that will help the company cover any potential liabilities from future utility-caused fires.
PG&E, which remains on federal probation tied to a deadly gas pipeline blast, agreed to a number of reforms including overhauling its board after regulators found the utility failed to properly operate and maintain power lines that sparked a series of blazes, including the worst in California history.
(Updates with PG&E statement starting in third paragraph)
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