(Reuters) - Shares in California power company PG&E fell sharply for a second day on Tuesday as investors took fright at the prospect of bankruptcy proceedings to protect from $30 billion in potential liabilities related to wildfires in 2017 and 2018.
The state's biggest private utility's shares have lost 75 percent of their stock value since the start of January, when the company first began exploring options for protection from claims its equipment was responsible for the fires.
Shares lost 52 percent of their value on Monday after the company said it was preparing to file for Chapter 11 protection, and they were down another 28 percent in morning trade in New York.
California politicians are in a quandary over whether to offer a bailout or risk allowing the state's largest private utility to fail.
Governor Gavin Newsom, a Democrat, told reporters late on Monday his team was discussing the possibility of helping PG&E stay solvent, but no decisions had been made.
PG&E said on Tuesday that Rothschild Inc banker Roger Kimmel had resigned from the company's board, adding only that the resignation did not involve any disagreement on any matter relating to its operations.
Rothschild did not immediately respond to Reuters' requests for comment, while PG&E declined to comment.
PG&E, which provides electricity and natural gas to 16 million customers in northern and central California, faces widespread litigation, government investigations and liabilities that could potentially exceed $30 billion due to the fires.
Its chances of emerging from bankruptcy proceedings hinge in part on an arcane California legal rule that threatens to keep it perpetually on the hook for liabilities from catastrophic wildfires.
The doctrine, known as "inverse condemnation," exposes utilities in the state to liabilities from wildfires regardless of their negligence, as long as their equipment is involved.
That legal rule could keep PG&E exposed to additional liabilities from future fires and leave the company stuck in bankruptcy limbo, according to restructuring experts and people familiar with the matter.
Still, analysts from Chicago-based brokerage Morningstar, said in a note to clients that this was one of the rare cases where shares could emerge from the process with some value.
"The most likely near-term scenario is a fourth-quarter 2018 accounting charge that cuts PG&E's book equity well below its allowed regulatory capital structure," they said.
"Our new fair value estimate for PG&E is $11 per share after considering possible bankruptcy scenarios."
It was trading at around $6 half an hour after opening on Wall Street.