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Will California's PG&E file Bankruptcy?

Will California's PG&E file Bankruptcy?

If the Pacific Gas and Electric Co. are held liable for the deadly November 2018 wildfire in Northern California, it could add billions to the company's debt. The company’s insurance only covers $1.5 billion, coming far short of the estimated $15 billion in liabilities.

Financial Ruin

While the utility company hasn't made any announcements regarding bankruptcy, plunging stocks and the already $15 million in liabilities for the October 2017 wildfires could force the utility company into financial ruin. PG&E has $18 billion in unsecured bonds; these debts will have equal priority during bankruptcy to get repaid as the roughly $30 billion in expected liabilities from the 2017 and 2018 wildfires.

Huge Lawsuits

Michael Picker, president of the California Public Utilities Commission, said the state would work with PG&E so the company would not be forced into bankruptcy by huge debts from lawsuits.
Under a new law signed last September, PG&E will be able to pass some of the wildfire costs onto customers. The average customer will pay an extra $5.20 for every billion dollars the company must finance to pay for wildfire liabilities.

Bankruptcy Test

SB901 lets utilities use bonds that customers will pay off over time. But first, the utility company needs to go through a bankruptcy stress test to determine how much of the cost it can absorb on its own. The rest can be passed onto customers.Similar laws may be passed for the 2018 wildfire if PG&E is determined to be liable. More than 630 people are missing, and 63 deaths are attributed to the November fires still raging.

In a regulatory filing disclosure, PG&E stated it had experienced tower damage and outage on a nearby transmission line just 15 minutes before the fire started. This disclosure launched the current lawsuits.

In last year's fire, State investigators found PG&E to be responsible for 17 of the 21 fires in Northern California that October.

If tragedy hits you and your family and you are unable to keep up with the demands of creditors and basic living expenses, consider contacting a Sacramento bankruptcy attorney to discuss what options you may have.

New Credit Score Overhaul may Boost Your Credit

New Credit Score Overhaul may Boost Your Credit

Everyone wants a high credit score. Your credit, after all, is the financial key needed to access credit. Over the course of this year, you may have noticed that your own credit score has improved thanks to initiatives by the Consumer Financial Protection Bureau (CFPB). In fact, the average overall FICO Credit score in the US has hit a record of 704.

Effects of the Credit Score Change

According to the New York Federal Consumer Credit Panel and Equifax, the effects of the changes made to how the credit agencies report were largely positive. 65% of consumers with at least one collection account removed from their credit over the past year, witnessed a higher credit score. Overall, a few consumers could realize a 30-point jump in their credit score.

Because of the nature of the credit score changes, the individuals with more collection accounts on their credit report observed the biggest spike in credit score points. As one might assume, these were, in general, the individuals with the lowest credit scores to begin with. Thanks to improved standards for using public records, all major credit reporting agencies have also removed tax liens from credit reports, giving an additional credit score boost to consumers.

Importance of Credit Score

Because credit scores have woven themselves into every facet of our lives, your credit score should be protected whenever possible. Having a high credit score (in the 700+ range) will allow you to qualify for lower interest rate loans when purchasing an automobile or home. If you're currently working to rebuild your credit, 620 is most likely your target as this is typically seen as the baseline to be approved for a bank loan. Ensure that you request your credit report from all major credit reporting agencies annually to stay abreast of any reporting errors or inaccuracies.

Bankruptcy and Credit Scores

Consumers that are considering bankruptcy are often deterred by worries that their credit score will be ruined forever. While a Chapter 13 bankruptcy remains on your credit report for seven years, and Chapter 7 remains for ten, it is possible to increase your credit score after, and even during the bankruptcy process. When weighing the pros and cons of bankruptcy, one must account for two outcomes: the amount of repairable damage a bankruptcy can do to your credit score and the greater amount of damage that delinquent payments and other negative reports can continue to do to your credit score over time.

Bankruptcy in California

When filing a California bankruptcy, you can eliminate debts that are negatively affecting your credit score every month. Filing for bankruptcy protection also offers individuals the ability to show future lenders that they have managed their debt through the US Bankruptcy Court. Contact a Elk Grove bankruptcy attorney to understand how bankruptcy can affect your current debt.

New Law Helps Utilities Prevent California Bankruptcy

New Law Helps Utilities Prevent California Bankruptcy

A new law is helping utilities prevent a possible California Bankruptcy, but it appears as though the direct cost may be the burden of California utility consumers. The new law, signed in the last week of September 2018, is already drawing stringent criticism from Californians. Critics are calling the new measure, which allows California utility companies to bill customers to help pay future legal settlements from the 2017 wildfires, a bailout to prevent the bankruptcy of Pacific Gas & Electric Co., the nation’s largest public utility. Because lawmakers have determined that a large utility filing bankruptcy in California would be catastrophic, the bill will allow the Public Utility Commission to pass along the cost of liabilities to consumers.

PG&E Lawsuits

The embattled Pacific Gas & Electric Co. (NYSE: PCG) is facing multiple lawsuits from insurance companies who have spent over $10 billion covering insured losses and are subsequently looking to recoup their own costs from the tragic disasters. California Courts have determined the utilities were directly liable for the 2017 Northern wildfire damages for failing to follow predetermined safety precautions. Still fresh in the minds of Northern Californians, the 2017 wildfires burned over 245,000 acres across Butte, Napa, Sonoma, and Solano counties. State laws and regulations required that utility companies provide compensation for property damaged by its equipment.  In each case the courts found that vegetation was too close to PG&E power lines and that the fires directly stemmed from these violations.

How Much Will Consumers Pay

Just how much of a surcharge that PG&E will pass on to its customers is at the moment unclear. The reason being is that the total amount of damages PG&E will be responsible for hasn’t been decided. Once a final agreement is reached of how much financial damage the company can absorb, consumers could see a fee of $5.20 per $1 billion of financing that PG&E must acquire.

Lawmakers also hinted that the bill will assist with future wildfires and ultimately prevent a potentially catastrophic bankruptcy. For more information about Chapter 11 California bankruptcy cases, read more at Bankruptcy & Debt Resolution Attorneys.

New California Debt Collection Legislation Passed

New California Debt Collection Legislation Passed

Debt collectors licensed in the state of California have new requirements that will go into effect starting January 1st, 2019. California Governor Jerry Brown signed Assembly Bill No. 1526 into law on September 5th, 2018, which will amend the Rosenthal Fair Debt Collection Practices Act. This Act regulates debt collection practices among the debt collectors in the state. The new California Debt Collection law will affect how collections agencies attempt to collect time-barred debts.

What Are Time-Barred Debts?

Time-barred debt is money that has been owed so long that it has passed the statute of limitations. Time-barred debt is usually no longer legally collectible due to the amount of time that has passed.  States have different laws with respect to how much time must pass before a debt becomes time-barred. Some states limit the amount of time that has lapsed as short as three years and as long as ten.

California Statue of Limitations on Debt

In California, a creditor has four years to file an action based on a written debt. The new bill prohibits any debt collector from attempting to collect a debt via written communication if the debt is considered a time-barred debt without informing the consumer that they can no longer be sued for the debt in question. Depending on the age of the debt, however, California debt collectors may still be able to report the debt to the credit reporting agencies.

California Bankruptcy Can Discharge Old Debt

If you are experiencing an undue burden as a result of unsecured debt, filing for bankruptcy protection using Chapter 7 or Chapter 13 debt can discharge, or wipe out, your obligation to pay the debt. Contact a bankruptcy lawyer in Sacramento if you live in the Eastern District of California, to find out if you have enough debt or a low enough income to file for bankruptcy. Bankruptcy can also be used to stop collection activities and avoid lawsuits from creditors.

Lowe's Shuts down Bankrupt California Hardware Chain

Lowe's Shuts down Bankrupt California Hardware Chain

The hardware supplier, Orchard Supply Hardware, started 87 years ago in 1931, will be serving its last customers in California, Florida, and other states in 2018. Orchard Supply began as Orchard Supply Farmer Co-op, a modest co-op formed by 30 farmers based in the San Jose, California area. Orchard was started and thrived in the midst of the Great Depression, but after struggling through rocky financial health over the last eight years it could no longer compete with larger stores.

White Knight: Lowe's

Orchard Supply was in deep financial trouble at the start of 2013 and mid-year filed for Chapter 11 bankruptcy protection with the US Bankruptcy Courts in California. At the time of the announcement, the company also announced that it would sell its highest valued assets, including around 95 of the highest profit generating stores to Lowe's Home Improvement Stores. The company remained a separate brand within the home improvement store's portfolio.

Shutting down California Chain

On August, 21st 2018, Orchard Supply Hardware employees were notified that the company will begin closing all its stores nationwide beginning this week with the store closure plan expected to be completed by the end of the fiscal year. Lowe's CEO, Marvin Ellison mentioned that the impact of the store closures makes the decision a difficult one, but a decision necessary for the company to focus on its home improvement business. At the end of the day, the Orchard's $600 million sales contributions last year, amounted to less than 1% of Lowe's overall sales.

For customers looking for good deals on hardware supplies, Orchard Supply will begin store closing sales starting immediately with everything in Bay Area Stores being heavily discounted in order to liquidate store inventory. In typical liquidation sales, the 99 Orchard Supply Hardware stores will likely increase the percentage of discounts as time goes on.

Sacramento Business Bankruptcy

There comes a time in the life of a business where it must overcome financial adversity and Chapter 11 was enacted in order to deal with these issues and save the business. It's often true that the economy, business owners, and customers are all better off when companies are able to reorganize debt and stay in business. However, this isn't always the case and, in some cases, it is more sensible to close down the business to focus on new ventures. Contact a bankruptcy lawyer in Sacramento if restructuring your debt would benefit your company, as well as, your customers.


Fairfield Bankruptcy Watch: Mission Solano

Fairfield Bankruptcy Watch: Mission Solano

Mission Solano, a California homeless shelter announced this week that its board of directors is pursuing Chapter 7 bankruptcy  this week and will eliminate its nonprofit status. Business bankruptcy in Fairfield, CA offers the benefit of reducing debt for a struggling company.  The shelter has struggled to obtain additional bridge funding over the past several months that the organization said it needed in order to keeps its doors open. The CEO of Mission Solano cited that previous leadership was responsible for the dire financial situation, claiming the majority of the $3.1 million in liabilities was inherited from prior directors of the program.

Fairfield Bankruptcy Filing

Mission Solano filed for bankruptcy in the US Bankruptcy Court for the Eastern District of California in Sacramento, CA. Mission Solano's, according to tax filings, has an annual revenue of $3 million, but must pay $2.7 million in secured mortgage payments for its property and another $1.2 million in payroll, creating a financial shortfall that has been exacerbated by a lack of private funding. After much debate, the Mission Solano determined that the best way to ensure continued services to residents was to file for bankruptcy in Fairfield, CA and dissolve as an organization.

Shelter Remains Open

The executive director of the Coalition that runs Mission Solano in Fairfield made an announcement that they have "made significant progress in ensuring that shelter services remain open", while the organization sorts out its debt issues.

Fairfield Bankruptcy Attorney

Chapter 7 bankruptcy could be considered the very last option for a debt-stricken organization or business, and other options exist. If your company is having debt issues or trouble making payments to employees or vendors, it's time to consult a Fairfield bankruptcy attorney. If you wish to stay in business, your bankruptcy attorney may advise you to file for Chapter 11 in order to reorganize your company debt to allow you to continue business as usual, while renegotiating debt with your creditors.