Why Bankruptcy Laws Need to be Reformed

On Tuesday morning, California utility Pacific Gas and Electric (PG&E) filed for Chapter 11 bankruptcy (PDF), citing billions of dollars in potential damages and fines stemming from liability in several 2017 and 2018 wildfires.

The utility noted in its Tuesday filing that it has secured $5.5 billion in debtor-in-possession financing to continue operating while it restructures. PG&E serves 16 million customers, primarily in northern California.

PG&E announced that it would file for bankruptcy earlier this month, as investigations into some of California’s deadliest wildfires pointed to sparks from PG&E’s transmission equipment as the causes of more than a dozen fires over the last two years. Investigators have implicated PG&E in 18 wildfires that occurred during October 2017, according to The Wall Street Journal. The fires “burned nearly 200,000 acres, destroyed 3,256 structures, and killed 22 people,” the WSJ noted.

Investigators are still looking into whether PG&E’s equipment sparked the deadly Camp Fire that ripped through northern California last fall, killing 86 people. Late last week, the California Department of Forestry and Fire Protection announced (PDF) that PG&E was not responsible for the deadly October 2017 Tubbs Fire, which killed 23 people. That fire, the department said, was caused by a “private electrical system adjacent to a residential structure.”

Still, despite not being held responsible for the Tubbs Fire, PG&E says it could be on the hook for more than $30 billion in damages and fines related to California’s wildfires. Climate change has exacerbated wildfires in California, and the state allows fire victims to bring lawsuits against utilities whose equipment sparks a wildfire, even if that utility hasn’t been found negligent.

They need to be “Arthur Andersoned”, and their senior executives need to be jailed.

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