Outside of bankruptcy, companies get sued all the time. PG&E has a very problematic liability environment, as under California law it can be stuck paying for fire damages involving its equipment even if it wasn't negligent (2/
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It's very possible PG&E is being extra-conservative with power shutdowns because a fire during the firm's bankruptcy case would be harder for them to deal with than a fire outside of bankruptcy. This thread explains why (1/
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When a firm files for bankruptcy, bankruptcy law creates a distinction between things that happened prior to bankruptcy ("pre-petition") and things that happened DURING the bankruptcy case. (3/
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Fire liability that pops up DURING the bankruptcy case is legally different from the pre-bankruptcy fire liability. If a fire were to happen right now, PG&E would need to pay any damages claim in cash in full. (4/
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It could also potentially transfer money that would otherwise go to the pre-bankruptcy fire victims (2017 & 2018 wildfire victims, etc) and leave them unable to recover in full. That'd be hugely politically problematic for PG&E (5/
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To see how this works, consider a hypothetical world where PG&E has $20 in assets and $10 owed to pre-bankruptcy fire victims. PG&E can comfortably pay those fire victims what they are owed. Now imagine there is a fire tomorrow that causes $20 in damages. (6/
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PG&E will have to pay those new victims with the first $20 of assets it has. Unfortunately, it has no more assets after those are exhausted, meaning the pre-bankruptcy fire victims are out of luck (7/
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Right now, PG&E is fighting for a plan of reorganization that protects its pre-bankruptcy shareholders. If they were a large fire, those shareholders would be wiped out. Hence, PG&E has incentives to be extra conservative at the moment (8/
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PG&E also has to worry about the political face they are showing in Sacramento, where they have asked for help twice and might ask again, and to avoid a situation where they are forced to raise rates, which they'd very much prefer not to do immediately (9/
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I'm not saying that this is what they are doing - I have no inside information. It's very possible that this shutdown is going to save lives and property victims and the peculiar politics of Chapter 11 have nothing to do with it. At the same time, it's worth considering (10/10)
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But they still have enough money to pay for millions in executive bonuses
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Except the bankruptcy judge has not allowed executive bonuses. Executives have not received bonuses in some time now.
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