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Why PG&E Corporation's Shares Popped 27% on Wednesday

By Travis Hoium – Apr 8, 2020 at 3:55PM

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A good ruling in bankruptcy court has investors excited about this utility stock.

What happened 

Shares of bankrupt utility PG&E Corporation (PCG 0.97%) jumped as much as  27.9% in trading Wednesday after getting a positive ruling from a judge in its bankruptcy. Shares closed the day up 27%. 

So what 

A committee of attorneys for wildfire victims in PG&E territory was attempting to delay a vote on approving the company's bankruptcy restructuring, and their efforts were blocked. The committee wanted to send a letter to victims encouraging them to delay the vote in order to change the terms of their $13.5 billion settlement. 

Electric transmission lines with rendering of different connection nodes.

Image source: Getty Images.

Judge Dennis Montali said he wouldn't support the delay in the vote, although he said attorneys can make the recommendation if they want to. PG&E is under some pressure to get through the bankruptcy process so it can take advantage of the state's fund to cover the potential future cost of wildfires. But there's a June 30 deadline to get through the restructuring, so delays could be detrimental in the long term to the company and shareholders.

Now what 

While this is a small positive on the path to restructuring, I don't think it's a buy sign for investors. Remember, PG&E is still in bankruptcy, and it's not clear what investors will be getting when it emerges. Even if you're interested in this energy stock, I would wait until it's out of bankruptcy and generating consistent earnings before jumping in. 

Travis Hoium has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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