(Bloomberg) -- Market turmoil from the coronavirus is spilling into the bankruptcy of California power giant PG&E Corp.
Victims of wildfires blamed on PG&E’s equipment are concerned the sell-off on Wall Street could hobble stock payments that make up half of a $13.5 billion settlement over claims from the blazes, said Robert Julian, an attorney for the victims.
Lawyers for the victims are being “inundated with questions” from clients because the “coronavirus is causing these impacts in real time,” he said during a bankruptcy hearing Wednesday. The attorneys have entered into mediation to resolve how long the victims’ trust will be required to hold shares, the impact of the sell-off and other issues.
“The victims need to know these facts in order to vote on the plan,” Julian said.
PG&E shares have lost about 40% of their value in the past month. They rose 8.9% to $10.07 at 10:34 a.m. in New York.
Two fire victims have resigned in protest from an 11-member committee appointed to represent those who lost homes, businesses and loved ones in the bankruptcy case. One of them, Kirk Trostle, whose home burned in the 2018 Camp Fire, said he was stepping down so he could speak out against the settlement, calling it “flawed.”
Trostle said he was concerned about the fire victims trust being funded with PG&E shares. “There is an inherent risk to the stock, especially with Covid 19,” he said.
PG&E is preparing to send out disclosure information about its reorganization plan to about 250,000 shareholders, wildfire victims and other creditors who will vote on the proposal, an attorney for the company said. The utility is racing to get its bankruptcy plan approved by the court and state regulators before a state deadline of June 30.
“Throughout this process, our focus has remained on getting victims paid fairly and as soon as possible,” PG&E said in a statement.
The wildfire victims would like to have additional information distributed about stock payments once their issues are resolved, Julian said Wednesday. PG&E attorney Stephen Karotkin said there was adequate disclosure information about the stock awards in the voting materials.
“To the extent that people think additional disclosure is required, then they can bring it before court,” Karotkin said during the hearing, conducted by telephone to prevent the virus from spreading.
(Adds PG&E comment in ninth paragraph)
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