Bankrupt PG&E May Spend $150M on Fees
Mar. 20, 2002
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SAN FRANCISCO (AP) _ Bankrupt Pacific Gas and Electric Co. plans to spend at least $150 million on bankruptcy lawyers and accountants, with much of that money going to cover the legal fees of its parent company, the utility disclosed in a court filing.
California's largest utility already has come under scrutiny for paying high fees to its legal team. Earlier court records have shown PG&E spent about $1 million a week _ more than $32 million by the end of 2001 _ to pay outside professionals, sometimes at rates higher than $600 an hour.
However, page 232 of a recent PG&E court filing reveals the utility expects to pay an additional $120 million to $150 million in legal fees.
PG&E's plan to emerge from bankruptcy calls for using the additional money to pay its parent corporation's legal team, which helped argue the utility's case in bankruptcy court. PG&E has said the estimated fees were projected over the life of the bankruptcy case, which the company hopes to conclude by year's end.
Lynn LoPucki, a UCLA bankruptcy professor who studies bankruptcy fees, said PG&E's costs are out of line with fees in other cases.
For example, retailer Montgomery Ward spent $37 million on professional fees in its case, Levitz spent $27 million and Geneva Steel $15 million, according to a study by LoPucki.
Consumer advocates and the Public Utilities Commission, which regulates PG&E and opposes its reorganization plan, say the case has grown so expensive because PG&E hopes to emerge from bankruptcy by freeing itself from state regulation, which has led to a protracted court battle.
The fees also shrink the pool of money PG&E intends to use to pay its thousands of creditors. PG&E claimed debts of roughly $13 billion when it filed for Chapter 11 bankruptcy protection April 6, 2001.