But even if the disaster-relief agencies are no longer angling for a piece of the victims' fund, significant questions remain for PG&E if it hopes to wrap up one of the most complex bankruptcy cases in U.S. history within the next few months. PG&E must resolve the case by June 30 in order to qualify for coverage from a wildfire insurance fund that California created to help insulate the company against future losses if its outdated electrical grid ignites more fires.
One of the biggest issues is whether the $13.5 billion fund involved in the bankruptcy case would fully compensate victims for emotional damages and property, even with the government agencies now at the back of the line seeking a much lower amount.
Karotkin told Montali that PG&E believes the roughly 82,000 people who are expected to seek money from the victims' fund would be paid in full, although he wouldn't guarantee it. About 77,000 people who have filed claims so far have yet to state a specific amount, according to the victims' lawyers.
Before PG&E struck the deal setting up the $13.5 billion fund in December, victims' lawyers had estimated there were about $36 billion in claims.
Montali is now trying to decide whether the victims should be told in a disclosure statement that they might only receive a portion of what they are owed. PG&E is scheduled to send out the statement next month to more than 400,000 parties who will be able to vote on its reorganization plan. Many of the wildfire victims have threatened to vote against the plan in an attempt to pressure PG&E to increase the pool of money, something the company said it cannot afford to do.
PG&E also still must win over Gov. Gavin Newsom and its chief regulator, the California Public Utilities Commission, to get out of bankruptcy. California holds veto power because PG&E needs its approval of the bankruptcy plan to be covered by the state's wildfire insurance fund.
Newsom and state regulators have so far rejected the plan as carrying too much debt for PG&E to be able to make the estimated $40 billion in needed improvements to its electrical grid. They also are demanding PG&E replace its entire 14-member board of directors.
KQED's Lily Jamali contributed reporting to this post.