Wildfire victims worry about PG&E's possible bankruptcy

SANTA ROSA, Calif. (KGO) -- Attorneys for those who lost homes and loved ones in the wildfires the past two years are holding meetings, trying to calm their clients.

The wildfire victims are worried about the impact on their cases, now that Pacific Gas and Electric has filed papers with the Securities and Exchange Commission that the utility intends to go into Chapter 11 bankruptcy.

RELATED: PG&E bankruptcy could limit fire management plan investments

About 300 wildfire victims crowded into an auditorium at the Flamingo Hotel in Santa Rosa Sunday.

Attorney Mikal Watts told the ABC7 News I-Team the bankruptcy "is not good news, but it's not the end of the process. The lawsuits don't miraculously go away through some bankruptcy judge sprinkling fairy dust against the liabilities and making them disappear, that's not the way it works."

Watts says that bankruptcy is normally reserved for companies whose liabilities vastly exceed their assets and that the utility has billions in reserve.

PG&E Interim CEO John Simon said in a release last week, "Chapter 11 will best enable PG&E to resolve its potential liabilities in an orderly, fair and expeditious fashion. The people affected by the devastating Northern California wildfires are our customers, our neighbors and our friends... We remain committed to helping them through the recovery and rebuilding process."

State Senator Jerry Hill, Democrat from San Mateo, tells the I-Team the legislature can't prevent PG&E from going bankrupt but may work on guarantees that the wildfire victims be made whole.

RELATED: Angry protest held over PG&E wildfire plans

A spokesman for California Governor Gavin Newsom tells us, a strike team is talking to all levels of state government to find a way forward.

Renowned activist Erin Brockovich is part of the Watts legal team, and she'll appear at a rally with wildfire victims on the south steps of the State Capitol at noon Tuesday.

Take a look at for a look at more stories and videos by Dan Noyes and the ABC7 News I-Team.