In bankruptcy, debt will almost always take priority...meaning current stockholder will get wiped out and the debt holders will get paid with newly issued stock. If the company remains a going concern...
The people who hold the hold the debt will likely also take a real haircut because if the State of California takes over they will only pay a few cents on the dollar....
Bottom line , current stockholders will get wiped out, current bond holders will take a big haircut and the citizens of California will get a state run/owned utility company...
California will conduct a bankruptcy similar to the way Obama conducted the GM & Chrysler bankruptcies.....giving the unions everything while shafting every investor, regardless of their priority in debt recovery.