If only they were as good at delivering power and keeping their utility lines from becoming giant lighters as they are at running legal circles around a hedge fund.

Paul Singer and his team at Elliott Management are pretty good at knowing exactly what their legal rights are and then employing them to the fullest. Unlike apparently everyone else, for instance, they actually read the pari passu clauses inserted as a matter of course into sovereign bond contracts and insisted that they meant what they said for 13 long years all the way to the bank. So it must be especially galling to have been outfoxed legally by a public utility better known for burning a substantial amount of California to a cinder than for providing power to the residents of that state.

First, in order to get a sulking Elliott to stop trying to prevent it from exiting bankruptcy, PG&E made a deal with it, agreeing to use its “best efforts” to get Elliott access to some $2 billion in equity commitments. Then, it exited bankruptcy with a Chapter 11 plan that included the standard release and exculpation provisions. Only then, apparently, did Elliott realize that PG&E had no intention of using its best efforts, or any other efforts, to get the hedge fund the money it was promised. By then, however, it was too late.

PG&E is release from claims rising from such contracts because the litigation releases in the utility’s Chapter 11 restructuring plan went into effect….

We sincerely hope anyone responsible for this little oversight has safely relocated to West Palm Beach before Singer can get his hands on them.

Elliott Loses $250 Million Claim Bid in PG&E Bankruptcy Case [Bloomberg Law]
PG&E Wins $250 Million Fight With Bondholders Over Capital Raising [WSJ Pro Bankruptcy]