PG&E Bankruptcy Shorted Some Creditors, Appeals Court Says (1)

Utility giant PG&E Corp.'s bankruptcy plan wrongly forced some of its creditors to accept a lower interest rate on their recoveries, an appeals court ruled in a reversal that will force reconsideration of whether creditors should get some $200 million more in interest payments.

In a split decision Monday, the US Court of Appeals for the Ninth Circuit said an ad hoc committee of trade creditors in PG&E’s Chapter 11 case had a right to receive so-called post-petition interest at rates governed by state law or their contract—not at the lower 2.59% federal rate.

The published decision addresses what post-petition ...