PG&E Corporation (NYSE:PCG) announced the submission of an updated bankruptcy reorganization plan aiming to address the concerns raised by Gavin Newsom, California Governor. The company will make changes to the board of directors. It will also appoint a new Chief Security Officer and Chief Risk Officer. They will report to the CEO of PG&E. The company will regionalize the infrastructure and operations.
PG&E has submitted the organizational changes in a filing with the US bankruptcy court and the California Public Utilities Commission on Friday. According to the reorganization plan, half of the directors will reside in California. The company will select the board members, who have expertise in safety.
The shares of PG&E traded higher on the news of revamping of the director board and the appointment of safety experts. A new reorganization plan expects to help PG&E to come out of bankruptcy by winnings state approval.
Newsom wrote a letter to PG&E on December 13, 2019, rejecting the previous reorganization plan saying it lacks the changes in governance. He brags for stringent safety enforcement mechanisms adhering to the wildfire statute in California. Newsom said the previous reorganization does not comply with the California law. He also criticized the present board of PG&E and said it comprises of appointees of hedge funds. According to the governor, the bankruptcy plans depend on the short term financing and debt. As a result, the company will not have sufficient funds for safety upgrades.
Newsom accuses PG&E of profit-minded
Newsom has accused PG&E that it is profit-minded. According to Newsom, PG&E is giving less importance to the maintenance of the power lines. He also said the company is poorly managing the blackouts to prevent wildfires during high-speed winds.
PG&E filed bankruptcy protection in 2019
PG&E filed for bankruptcy protection in 2019 under chapter 11 after facing liabilities of $30 billion from wildfires caused due to its equipment. Newsom has warned PG&E that if it fails to stringent measures to reform itself, the government will take over the company.
Bill Johnson, Chief Executive Officer of PG&E, said the company will exit bankruptcy with improved operations and enhanced safety structure. The board and the management will focus on providing clean, reliable, and safe energy to the customers.