What happened

Shares of PG&E (NYSE:PCG) traded down more than 27% on Monday morning following a report that the company will have to face a jury trial over a 2017 fire. The decision adds a new potential uncertainty to PG&E's ongoing restructuring effort.

So what

PG&E filed for bankruptcy protection in late January as part of a plan to deal with upward of $30 billion in wildfire liabilities stemming from a blaze last fall. The so-called Camp Fire in northern California, which resulted in 85 deaths and massive property damage, was sparked by a PG&E power line.

Utility power lines span a rural scene.

Image source: Getty Images.

The company is hoping to navigate through bankruptcy and emerge with its fire-related liabilities behind it, and potentially with assistance from the state legislature that should help it manage future liabilities. However, The Wall Street Journal reported late Friday [subscription required] that PG&E will have to face a jury trial over a separate fire, one that took place in 2017. Although California investigators concluded that PG&E equipment was not responsible for the so-called Tubbs Fire, lawyers for insurers and victims claim they can prove otherwise.

The news comes less than a week after a court-appointed monitor submitted a report that claims PG&E has been careless in its efforts to manage trees that could pose wildfire threats. While PG&E disputes that analysis, the net effect of the recent news flow has been to raise uncertainty about the company's plan to push through bankruptcy, as well as to create new questions about the utility's overall liabilities and the ability of shareholders to receive some recovery from the bankruptcy process.

Now what

The bull case for PG&E through this restructuring is that there is real value in the company's assets, and it is in the best interest of California lawmakers to ensure a steady and stable power utility for the state's citizens. Nothing about that thesis has changed, however; the more uncertainty there is surrounding the company's culpability for past fires, the less likely it is that the restructuring will proceed as planned.

Shares of PG&E have now lost nearly 40% of their value since markets opened on Aug. 14, and they are down 57% year to date. The company did win a court victory last week when it was allowed to retain its sole right to formulate a bankruptcy exit plan over the objection of two groups of creditors who have gathered billions in financial commitments to work out their own plan. But should the restructuring drag on or more potential liabilities surface, expect the rumblings from creditors to grow louder.

Buying into PG&E is a speculation, not an investment, and the last week is a reminder of how much remains unknown. For traders willing to take the plunge on PG&E, expect more volatility in the weeks and months to come.