PG&E, utility tied to wildfires, will file for bankruptcy

New York(CNN Business) Pacific Gas and Electric, facing billions of dollars in claims over the deadly 2018 Camp Fire, is headed to bankruptcy court.

PG&E, the state's largest utility, said Monday it will file for bankruptcy on January 29, after a 15-day waiting period required by California law. It needs to use the bankruptcy process, which will allow it to shed some of its debt, to pay for damages and stay in business to provide gas and electric service to its customers.

Shares of PG&E (PCG) plunged 48% when the market opened Monday.

The company, in a public filing, cited at least $7 billion in claims from the Camp Fire. The wildfire caused 86 deaths and destroyed 14,000 homes, along with more than 500 businesses and 4,300 other buildings.

It is believed the fire was started when a PG&E power line came in contact with nearby trees. PG&E reported "an outage" on a transmission line in the area where the blaze began, about 15 minutes before it started. Within the massive burn area, PG&E found power equipment and a fallen power pole riddled with bullet holes, according to a letter it sent to regulators. The company also reported that it found a downed line with tree branches on it.

In addition, a series of wildfires in 2017, many of which were also blamed on PG&E, caused $10 billion in damages and 44 deaths. In 11 of those fires, state investigators found the company violated codes regarding brush clearance near its power lines or had made related violations.

"The people affected by the devastating Northern California wildfires are our customers, our neighbors and our friends, and we understand the profound impact the fires have had on our communities and the need for PG&E to continue enhancing our wildfire mitigation efforts," said John Simon, who was named interim CEO on Sunday, in a statement. "We remain committed to helping them through the recovery and rebuilding process. We believe a court-supervised [bankruptcy] process ...will best enable PG&E to resolve its potential liabilities in an orderly, fair and expeditious fashion."

PG&E said in a company filing Monday that it has only about $1.5 billion in cash and cash equivalents on hand. It said it believes bankruptcy is in the best interests of not just wildfire claimants but also other creditors, its shareholders and customers.

Shareholders are generally wiped out in the bankruptcy process. Shares of PG&E were already down 63% since the start of the Camp Fire.

On Sunday night the company reported that CEO Geisha Williams, who had been in the job less than 11 months, has stepped down. The company said it would look to hire a new chief executive with "extensive operational and safety expertise."

Correction: An earlier version of this article misstated the length of the time PG&E must wait before filing for bankruptcy.