Dive Brief:

• U.S. Bankruptcy Judge Dennis Montali intends to greenlight Pacific Gas & Electric's (PG&E) reorganization plan, he said at a hearing Tuesday — as the company pleaded guilty to 84 counts of involuntary manslaughter connected to the 2018 Camp Fire at a separate court
• PG&E is headed out the door of bankruptcy "a much better place to ... deal with its vast problems, including the billions and billions and billions of dollars of damage that it caused," Montali said. He may conduct a hearing soon to fine-tune the language of his order confirming its plan.
• Meanwhile, PG&E Corp. President and CEO Bill Johnson appeared before a Northern California county court and acknowledged the "pain and anguish" of victims of the 2018 Camp Fire. "I make this plea with great sadness and regret, and with eyes wide open to what happened and to what must never happen again," he said.

Dive Insight:

The Camp Fire, which was sparked by a PG&E transmission line in Butte County, Northern California, burned across more than 153,000 acres of the state, destroyed nearly 19,000 structures and resulted in 85 civilian fatalities. The utility filed for bankruptcy soon after, estimating that it faced billions of dollars of liability connected to that fire as well as previous wildfires caused by its infrastructure. 

In March, the company announced that it had agreed to plead guilty to 84 counts of involuntary manslaughter and pay $4 million in fines as part of a settlement with the Butte County district attorney. At a county court hearing on Tuesday, Johnson, on behalf of the company, entered a guilty plea to each of the counts as the names of the victims were read out. 

Johnson — who intends to retire from PG&E after it exits bankruptcy — apologized personally and on behalf of the utility for the pain caused by the Camp Fire.

"We can't replace all that the fire destroyed, but we do hope by pleading guilty, by accepting accountability, by compensating the victims, supporting rebuilding and making significant lasting changes to the way we operate, we can honor those who were lost and help this community move forward," he said. 

The hearing will continue over several days this week with victim impact statements, and a possible sentencing on Friday. 

"This was a historic moment, and hopefully a historic moment for corporate America to know that prosecutors wherever will not allow them to get away with recklessly endangering the lives of the citizens that they serve," Butte County District Attorney Michael Ramsey said at a press conference after the hearing.

Meanwhile, Montali told lawyers on Tuesday that he will conclude PG&E's reorganization plan should be confirmed. The plan would compensate victims of the Northern California wildfires through a $13.5 billion fund — built of cash and company stock — as well as an additional $12 billion in payments to insurance companies and local government entities affected by the fires. Montali intends to issue a written decision addressing some of the "big issues" and then might schedule a hearing to discuss the language of his eventual order confirming the plan.

He also allowed PG&E to modify the equity backstop commitment letters that the court initially approved in March, in light of the market turmoil caused by the COVID-19 pandemic. Those commitment letters dictate that PG&E could only conduct a market offering at a price of $18 or $19 per share, PG&E said in a court filing. But since they were negotiated, the market impact from the COVID-19 pandemic has caused the company's common stock to trade fall to the $11 to $12 range. 

Without the amendments, PG&E attorney Paul Zumbro said, the company would have to sell its shares to the backstop parties at $7.50 per share, which "would have a depressing effect on the stock price for all shareholders, including the fire victims trust."

The motion was opposed by some of the fire victims, including William Abrams, a survivor of the 2017 Tubbs Fire.

"The fact that they have to amend these backstops to cover a bad deal and poor financing should not be lost on the court," he said.

But Montali eventually approved the amendments, noting that PG&E's plan is supported by the official committee of fire victims, California Gov. Gavin Newsom as well as the California Public Utilities Commission, which approved it last month. 

"To me, the evidence is satisfactory and well established that … the company is charting a course in the middle of COVID, and the depressed economy and bankruptcies popping up everywhere and still is on track to be able to make this plan effective on schedule," he said.