Kimberly Spainhower hugs her daughter Chloe, 13, while her husband Ryan Spainhower (R) searches through the ashes of their burned home in Paradise, California on Nov. 18, 2018.
Josh Edelson—AFP/Getty Images
December 17, 2019 10:16 PM EST

Bankrupt utility giant PG&E Corp. won court approval for its $13.5 billion plan to compensate the victims of catastrophic fires blamed on its equipment, as a well as a deal with insurers.

Judge Dennis Montali’s ruling is a major victory for PG&E. The company has spent months trying to gain support for a viable restructuring plan so it can emerge from the biggest utility bankruptcy in U.S. history by a state-imposed deadline of June 30, 2020.

The company filed for Chapter 11 in January after its power lines were tied to deadly blazes that erupted across Northern California in 2017 and 2018, burying it in $30 billion worth of liabilities. Settling claims tied to those fires has emerged as the biggest obstacle in the utility’s exit from bankruptcy.

Montali, who decided on the deal during a hearing in San Francisco Tuesday, said wildfire victims continue to be the most important creditor group in PG&E’s bankruptcy case. Without their support, the company would have a much harder time getting its reorganization approved. As part of the settlement reached between PG&E and victims, they’ve agreed to support the company’s restructuring plan.

“It’s hard to imagine that I would ever approve a plan that is voted down by the victims,” Montali said while debating the merits of the deal.

Montali’s decision on the victims’ settlement could avert a potentially lengthy trial that was set to begin next year to determine PG&E’s liabilities and damages tied to the wildfires. A U.S. district judge and lawyers involved in that case said earlier on Tuesday that the trial would probably be abandoned if the settlement with fire victims was approved in bankruptcy court.

Cecily Dumas, an attorney representing wildfire victims, had urged the court to approve the settlement in the interest in moving PG&E’s bankruptcy case forward.

“This was not an easy decision and it was not an easy negotiation — many, many individuals have been agonizing over this compromise,” she said, adding that 70% of lawyers representing victims supported the compromise.

Contact us at editors@time.com.

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