California wildfire victims fear they'll be last in payout

SAN FRANCISCO (AP) — A $13.5 billion settlement between victims of California's catastrophic wildfires and the utility blamed for causing them was supposed to bring some peace and hope to people still reeling from the devastation.

Instead, the deal has sparked confusion, resentment, suspicion and despair as the victims, government agencies, and lawyers grapple for their piece of the pie.

More than 81,000 have filed claims to the settlement fund, setting the stage for a potential scrum as Pacific Gas & Electric scrambles to emerge from one of the most complex bankruptcy cases in U.S. history by June 30.

“How is it in any way fair that the actual victims of this fire, or any of the fires, are put at the very, very bottom of the priority list,” wrote Michelle Barker, 54, in a recent letter to U.S Bankruptcy Judge Dennis Montali, who is overseeing the settlement. Barker lost her home to the 2018 fire that wiped out Paradise, California.

The tensions may boil over during a hearing Wednesday focusing on whether federal and state agencies are entitled to tap the fund to recoup any of the $4 billion they doled out after the wildfires. Health chain Adventist Health is also seeking at least $1 billion for losses from its heavily damaged hospital in Paradise, and lawyers could try to take up to a third.

Victims are also upset that half the settlement, or $6.75 billion, would be paid in stock from PG&E, the company responsible for ruining their lives.

The stock payment may prove a clever strategy, said San Francisco bankruptcy attorney Michael Sweet, because that could make it more difficult for California Gov. Gavin Newsom to follow through on threats of a government-backed takeover if PG&E doesn't make reforms.

A government takeover would likely cause the...