California Governor Presses PG&E CEO to Exit Bankruptcy Quickly

(Bloomberg) -- California Governor Gavin Newsom pressed PG&E Corp. Chief Executive Officer Bill Johnson to reach a swift resolution to the company's bankruptcy or face a potential state takeover in the face of a backlash from the utility's mass blackouts designed to prevent its power lines from sparking wildfires.

Newsom met Johnson Tuesday behind closed doors and reiterated “the state's frustration with PG&E and strongly urged the parties to get a resolution that ensures what we saw over the last month never happens again,” said a spokesman for the governor's office, referring to the power shutoffs. Representatives of PG&E shareholders, bondholders, wildfire victims and other creditors also attended.

The governor wants the utility to settle the Chapter 11 proceedings before June 30 or the state will “intervene,” the spokesman said.

Frustrated with PG&E, Newsom is trying to take on a bigger role in the largest U.S. utility bankruptcy in history, which will shape how power is delivered in the world's fifth-largest economy. Some of Wall Street's biggest names are jostling for control of the utility, including a group of bondholders led by billionaire Paul Singer's Elliott Management Corp. The bondholders have aligned with wildfire victims to offer a reorganization plan that would largely wipe out existing PG&E shareholders including Seth Klarman's Baupost Group LLC.

Concerned that progress in the bankruptcy has stalled, U.S. Bankruptcy Judge Dennis Montali recently ordered the parties into mediation. PG&E filed for bankruptcy in January amid an estimated $30 billion of liabilities from wildfires tied to its equipment.

To contact the reporter on this story: Mark Chediak in San Francisco at mchediak@bloomberg.net

To contact the editors responsible for this story: Lynn Doan at ldoan6@bloomberg.net, Andrew Pollack, Peter Blumberg

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