PG&E noteholders ready to invest $29.2 billion as part of reorganization plan

FILE PHOTO: A PG&E truck carrying an American Flag drives past PG&E repair trucks in Paradise, California, U.S. November 21, 2018. REUTERS/Elijah Nouvelage/File Photo

(Reuters) - A group of PG&E Corp PCG.N noteholders said in a court filing on Wednesday that they are ready to invest $29.2 billion into the power producer as part of a reorganization plan that will pay off liabilities from wildfires that drove it to bankruptcy.

The proposed plan will create two trusts, a $14.5 billion trust for compensating individual wildfire victims and an $11 billion trust for paying insurers with subrogation claims against PG&E for payments they had made after the blazes in 2017 and last year, according to the filing in the U.S. Bankruptcy Court in San Francisco.

The plan will give the noteholders new debt and a controlling equity stake in a reorganized PG&E.

Subrogation allows insurers to recoup funds that they have paid to policy holders for insured losses from third parties that they hold responsible for the losses.

The committee representing the wildfire victims in PG&E’s bankruptcy is supporting the noteholders’ group.

PG&E, joined by major shareholders, is opposing efforts by the noteholders to be allowed to file their reorganization plan. The company on Sept. 19 outlined its own plan that will pay $17.9 billion for wildfire claims and caps payouts to victims at $8.4 billion and to insurers at $8.5 billion.

Earlier this month, the company reached an $11 billion settlement to resolve most claims by insurance carriers related to the wildfires.

At the time of its Chapter 11 filing in January, PG&E projected it could face more than $30 billion in liabilities from wildfires, including last year’s Camp Fire, the deadliest and most destructive wildfire of California’s modern history.

Reporting by Kanishka Singh in Bengaluru; editing by Christian Schmollinger