The fund is expected to finance about $8 billion for settling wildfire claims between 2017 and 2018, besides setting aside another $3 billion for future claims, Bloomberg said, citing people familiar with the matter.
PG&E is in consultation with law firm Jones Day and boutique investment bank PJT Partners Inc, which are advising a group of PG&E's stakeholders, including Knighthead Capital Management, Redwood Capital Management and Abrams Capital Management.
These three shareholders collectively hold about 10% of the utility's stake.
PG&E declined to comment.
San Francisco-based PG&E sought Chapter 11 bankruptcy protection in January after facing liabilities of more than $30 billion in the wake of Camp Fire, California's deadliest and most destructive wildfire in recent times.
The Camp Fire killed more than 85 people, destroyed over 14,600 houses, mobile homes and other housing units, according to California's Department of Finance.
(Reporting By Shradha Singh in Bengaluru; Editing by James Emmanuel)