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WEIL, GOTSHAL & MANGES LLP 

Stephen Karotkin (pro hac vice pending) 

(stephen.karotkin@weil.com) 

Jessica Liou (pro hac vice pending) 

(jessica.liou@weil.com) 

Matthew Goren (pro hac vice pending) 

(matthew.goren@weil.com) 

767 Fifth Avenue 

New York, NY 10153-0119 

Tel: 212 310 8000 

Fax: 212 310 8007 

CRAVATH, SWAINE & MOORE LLP 

Paul H. Zumbro (pro hac vice pending) 

(pzumbro@cravath.com) 

Kevin J. Orsini (pro hac vice pending) 

(korsini@cravath.com) 

Omid H. Nasab (pro hac vice pending) 

(onasab@cravath.com) 

825 Eighth Avenue 

New York, NY 10019 

Tel: 212 474 1000 

Fax: 212 474 3700 

KELLER & BENVENUTTI LLP 

Tobias S. Keller (#151445) 

(tkeller@kellerbenvenutti.com) 

Jane Kim (#298192) 

(jkim@kellerbenvenutti.com) 

650 California Street, Suite 1900 

San Francisco, CA 94108 

Tel: 415 496 6723 

Fax: 650 636 9251 

Proposed Attorneys for Debtors and Debtors 

in Possession

UNITED STATES BANKRUPTCY COURT 

NORTHERN DISTRICT OF CALIFORNIA 

SAN FRANCISCO DIVISION 

In re: 

PG&E CORPORATION,

Debtor. 

Tax I.D. No. 94-3234914

Case Nos. 19-30088 (DM) 

 19-30089 (DM) 

Chapter 11 

MOTION OF DEBTORS PURSUANT TO 

11 U.S.C. §§ 105, 362, 363, 364, 503 AND 

507, AND FED. R. BANKR. P. 2002, 4001, 

6003, 6004 AND 9014 FOR INTERIM AND 

FINAL ORDERS (I) AUTHORIZING THE 

DEBTORS TO OBTAIN SENIOR 

SECURED, SUPERPRIORITY, 

POSTPETITION FINANCING, 

(II) GRANTING LIENS AND 

SUPERPRIORITY CLAIMS, 

(III) MODIFYING THE 

In re: 

PACIFIC GAS AND ELECTRIC 

COMPANY,

Debtor. 

Case: 19-30088 Doc# 23 Filed: 01/29/19 Entered: 01/29/19 02:24:53 Page 1 of 42
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Tax I.D. No. 94-0742640 AUTOMATIC STAY, (IV) SCHEDULING 

FINAL HEARING AND (V) GRANTING 

RELATED RELIEF 

Date: 

Time: 

Place: 

PG&E Corporation (“PG&E Corp.”) and Pacific Gas and Electric Company (the “Utility” or 

the “Borrower”), as debtors and debtors-in-possession (collectively, “PG&E” or the “Debtors” and 

together with their non-Debtor subsidiaries, the “Company”) in the above-captioned Chapter 11 Cases 

(the “Chapter 11 Cases”), hereby submit this Motion (the “Motion” or “DIP Motion”), pursuant to 

sections 105, 362, 363, 364(c)(1), 364(c)(2), 364(c)(3), 364(e), 503 and 507 of title 11 of the United

States Code (the “Bankruptcy Code”), Rules 2002, 4001, 6003, 6004 and 9014 of the Federal Rules 

of Bankruptcy Procedure (the “Bankruptcy Rules”) and Rules 2002-1 and 4001-1 of the Bankruptcy 

Local Rules of the United States Bankruptcy Court for the Northern District of California (the “Local 

Rules”), for authorization to obtain $5.5 billion of secured, superpriority postpetition financing on the 

terms detailed herein. The Debtors also seek an interim order approving the immediate borrowing and 

use of $1.5 billion of financing on the terms described herein in order to enable them to continue 

operating their businesses between the Petition Date and a final hearing on this Motion (the “Interim 

Period”). 

A proposed form of order granting the relief requested herein on an interim basis (the “Interim 

Order”) is attached hereto as Exhibit A. 

Case: 19-30088 Doc# 23 Filed: 01/29/19 Entered: 01/29/19 02:24:53 Page 2 of 42
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TABLE OF CONTENTS 

TABLE OF AUTHORITIES ............................................................................................................... iii 

INTRODUCTORY STATEMENT .......................................................................................................1 

CERTIFICATION .................................................................................................................................5 

MEMORANDUM AND POINTS OF AUTHORITIES .......................................................................6 

I. Jurisdiction ..........................................................................................................................8 

II. Background .........................................................................................................................8 

III. Overview of Proposed DIP Facilities .................................................................................8 

IV. PG&E’s Prepetition Financing .........................................................................................15 

A. Revolving Credit Facilities .....................................................................................15 

B. Term Loans .............................................................................................................16 

C. Senior Notes ............................................................................................................16 

D. Pollution Control Bonds ..........................................................................................16 

E. Trade Payables ........................................................................................................17 

V. Background to the Proposed Postpetition Financing ........................................................17 

A. The Debtors’ Liquidity ............................................................................................17 

B. PG&E’s Marketing Process to Obtain the DIP Facilities .......................................19 

C. The DIP Facilities ...................................................................................................22 

D. PG&E’s Immediate Need for Postpetition Financing .............................................23 

VI. Basis for Relief Requested ................................................................................................24 

A. The Court Should Approve the DIP Facilities Under Section 364(c). ....................24 

B. The Proposed Interim Order Should Be Granted ....................................................27

C. The DIP Lenders Should Be Deemed Good Faith Lenders under 

Section 364(e) .........................................................................................................30 

D. The Scope of The Carve-out Is Appropriate ...........................................................31 

Case: 19-30088 Doc# 23 Filed: 01/29/19 Entered: 01/29/19 02:24:53 Page 3 of 42
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E. The Automatic Stay Should Be Modified on a Limited Basis ................................31 

F. Bankruptcy Rule 4001(a)(3) Should Be Waived ....................................................32 

G. Bankruptcy Rule 6003 Has Been Satisfied .............................................................32 

VII. Request for Bankruptcy Rule 6004(a) and (h) Waivers ...................................................32 

VIII. Reservation of Rights .......................................................................................................32 

IX. Notice ................................................................................................................................33 

 

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TABLE OF AUTHORITIES 

Page(s) 

Cases 

In re Aeropostale, Inc., 

Case No. 16-11275 (SHL) (Bankr. S.D.N.Y. May 06, 2016) ..............................................................31 

In re Ames Dep’t Stores, 

115 B.R. 34 (Bankr. S.D.N.Y. 1990) .................................................................................25, 26, 31 

In re Breitburn Energy Partners LP, et al., 

Case No. 16-11390 (SMB) (Bankr. S.D.N.Y. May 23, 2016) .......................................................29

In re Capitol Station 65, LLC, 

 No. 17-23627-B-11, 2018 WL 333863 (Bankr. E.D. Cal. Jan. 8, 2018) ......................................26 

In re Eastman Kodak Co., et al., 

Case No. 12-10202 (MEW) (Bankr. S.D.N.Y. Jan. 20, 2012) ......................................................29 

In re Farmland Indus., Inc., 

294 B.R. 855 (Bankr. W.D. Mo. 2003)..........................................................................................25 

In re Fleetwood Enterprises, Inc., et al., 

Ch. 11 Case No. 09-14254-MJ (Bankr. C.D. Cal. Mar. 24, 2009) ..........................................28, 31 

In re Gardens Reg'l Hosp., 

No. 2:16-BK-17463-ER, 2017 WL 7101146 (Bankr. C.D. Cal. July 28, 2017) ...............25, 29, 31 

In re Los Angeles Dodgers LLC, 

457 B.R. 308 (Bankr. D. Del. 2011) ..............................................................................................25 

In re Newzoom, Inc., 

Case No. 15-31141 (Bankr. N.D. Cal. Oct. 15, 2015) ...................................................................27 

In re Rdio, Inc., 

Case No. 15-31430 (Bankr. N.D. Cal. Dec. 10, 2015) ..................................................................27 

In re Reading Tube Indus., 

72 B.R. 329 (Bankr. E.D. Pa. 1987) ..............................................................................................26 

In re Republic Airways Holdings Inc., 

No. 16-10429(SHL), 2016 WL 2616717 (Bankr. S.D.N.Y. May 4, 2016) ...................................25

Case: 19-30088 Doc# 23 Filed: 01/29/19 Entered: 01/29/19 02:24:53 Page 5 of 42
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In re Seriosa, Case No. 2:16-BK-14276-RK, 

2016 WL 3478953 (Bankr. C.D. Cal. June 20, 2016) ...................................................................28 

In re Simasko Prod. Co., 

47 B.R. 444 (D. Colo. 1985) ..........................................................................................................25 

In re Snowshoe Co., 

789 F.2d 1085 (4th Cir. 1986) .......................................................................................................26 

In re Sterling Mining Co., 

No. 09-20178-TLM, 2009 WL 2514167 (Bankr. D. Idaho Aug. 14, 2009) ..................................25

In re SunEdison, Inc., 

Case No. 16-10992 (SMB) (Bankr. S.D.N.Y. Apr. 26, 2016) .................................................29, 31 

In re The Great Atl. & Pac. Tea Co., Inc., 

Case No. 15-23007 (RDD) (Bankr. S.D.N.Y. July 21, 2015) .......................................................29 

In re Toys ‘‘R’’ Us, Inc., 

Case No. 17-34665 (Bankr. E.D. Va. Sep. 20, 2017) ....................................................................25 

Statutes 

28 U.S.C. § 157 ......................................................................................................................................8 

28 U.S.C. § 157(b) .................................................................................................................................8 

28 U.S.C. § 157(b)(2) ............................................................................................................................8 

28 U.S.C. § 1334 ....................................................................................................................................8 

28 U.S.C. § 1408 ....................................................................................................................................8 

28 U.S.C. § 1409 ....................................................................................................................................8 

28 U.S.C. § 1930(a) .............................................................................................................................13 

11 U.S.C. § 362 ......................................................................................................................................4 

11 U.S.C. § 363(c) ...............................................................................................................................28 

11 U.S.C. § 363(c)(2)(B) .....................................................................................................................15 

11 U.S.C. § 364 ....................................................................................................................................28 

11 U.S.C. § 364(c) .........................................................................................................................24, 25 

11 U.S.C. § 364(c)(1) .......................................................................................................................3, 24 

Case: 19-30088 Doc# 23 Filed: 01/29/19 Entered: 01/29/19 02:24:53 Page 6 of 42
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11 U.S.C. § 364(c)(2) .......................................................................................................................3, 24 

11 U.S.C. § 364(c)(3) .......................................................................................................................3, 24 

11 U.S.C. § 364(e) .........................................................................................................................30, 31 

11 U.S.C. § 365 ....................................................................................................................................32 

11 U.S.C. § 506(c) ...............................................................................................................................14 

11 U.S.C. §§ 544, 545, 547, 548, 549, 553, 723(a) .............................................................................15 

11 U.S.C. § 552 ....................................................................................................................................14 

11 U.S.C. § 552(b) ...............................................................................................................................14 

11 U.S.C. § 726(b) ...............................................................................................................................13 

11 U.S.C. § 1104 ..............................................................................................................................2, 12 

11 U.S.C. § 1107 ....................................................................................................................................6 

11 U.S.C. § 1108 ....................................................................................................................................6 

Other Authorities 

Court’s Guidelines for Cash Collateral and Financing Stipulations ..............................................5, 14 

Fed. R. Bankr. P. 1015(b) ......................................................................................................................8 

Fed. R. Bankr. P. 2002 .........................................................................................................................33 

Fed. R. Bankr. P. 4001 ...........................................................................................................................9 

Fed. R. Bankr. P. 4001(a)(1) ................................................................................................................31 

Fed. R. Bankr. P. 4001(a)(3) ..........................................................................................................31, 32 

Fed. R. Bankr. P. 4001(b)(2)..........................................................................................................28, 30 

Fed. R. Bankr. P. 4001(c) ................................................................................................................9, 27 

Fed. R. Bankr. P. 4001(c)(1)(B) ................................................................................................9, 10, 11 

Fed. R. Bankr. P. 4001(c)(1)(B)(i) .................................................................................................11, 13 

Fed. R. Bankr. P. 4001(c)(1)(B)(iv) .....................................................................................................13 

Fed. R. Bankr. P. 4001(c)(1)(B)(vi) .....................................................................................................13 

Fed. R. Bankr. P. 4001(c)(1)(B)(vii) ....................................................................................................13 

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Fed. R. Bankr. P. 4001(c)(1)(B)(x) ......................................................................................................14 

Fed. R. Bankr. P. 4001(c)(1)(B)(xi) .....................................................................................................14 

Fed. R. Bankr. P. 6003 .........................................................................................................................32 

Fed. R. Bankr. P. 6003(b) ..............................................................................................................30, 32 

Fed. R. Bankr. P. 6004(a) ....................................................................................................................32 

Fed. R. Bankr. P. 6004(h) ....................................................................................................................32 

Fed. R. Bankr. P. 9024 ...........................................................................................................................5 

Public Utilities Code § 854.2(d) ............................................................................................................6 

Senate Bill 901 ...........................................................................................................................4, 16, 17 

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INTRODUCTORY STATEMENT 

By this Motion, PG&E requests entry of the Interim Order, as well as a Final Order (the “Final 

Order”) granting, among other things, the following relief: 

(1) Authorization of DIP Facilities – authorizing the Borrower to obtain postpetition 

financing pursuant to a senior secured, superpriority debtor-in-possession new money 

credit facility in an aggregate principal amount of up to $5,500,000,000 on the terms 

and conditions set forth in the senior secured superpriority debtor-in-possession credit, 

guaranty and security agreement substantially in the form attached hereto as Exhibit B

(the “DIP Credit Agreement”)1, by and among the Borrower, PG&E Corp. and the 

other Guarantors (the “Guarantors”), the several banks and other financial institutions 

or entities from time to time party thereto as lenders or issuing lenders (collectively, 

the “DIP Lenders”), J.P. Morgan Securities LLC, Merrill Lynch, Pierce, Fenner & 

Smith Incorporated, Barclays Bank PLC, Citibank, N.A., BNP Paribas Securities 

Corp., Credit Suisse Loan Funding LLC, Goldman Sachs Bank USA, MUFG Union 

Bank, N.A. and Wells Fargo Securities LLC, as joint lead arrangers and joint 

bookrunners (together and in such capacities, the “DIP Arrangers”), JPMorgan Chase 

Bank, N.A., as administrative agent (in such capacity, and together with its successors 

and permitted assigns, the “DIP Administrative Agent” or “JPMorgan”), and 

Citibank, N.A., as collateral agent (in such capacity, and together with its successors 

and permitted assigns, the “DIP Collateral Agent”, and together with the DIP 

Administrative Agent, the “DIP Agents”), which credit facility shall comprise (a) a 

revolving credit facility (the “DIP Revolving Facility”; the loans incurred thereunder, 

the “DIP Revolving Loans”) with aggregate commitments of up to $3,500,000,000, 

including a letter of credit sub-facility in an aggregate amount of up to $1,500,000,000 

(the “DIP L/C Subfacility”), (b) a term loan facility (the “DIP Term Loan Facility”) 

in an aggregate principal amount of $1,500,000,000 (the loans incurred thereunder, the 

“DIP Term Loans”) and (c) a delayed draw term loan facility in an aggregate principal 

amount of $500,000,000 (the “DIP Delayed Draw Term Loan Facility”); (the loans 

incurred thereunder, the “DIP Delayed Draw Term Loans”; the DIP Delayed Draw 

Term Loans together with the DIP Revolving Loans and the DIP Term Loans, the “DIP 

Loans”; the DIP Delayed Draw Term Loan Facility, together with the DIP Revolving 

Facility and the DIP Term Loan Facility, the “DIP Facilities”)2

 ”) and shall include 

the following features: 

(a) Interest Rates: DIP Revolving Loans shall accrue interest at L+225 bps per 

annum and DIP Term Loans and DIP Delayed Draw Term Loans shall each 

accrue interest at L+250 bps per annum; default interest shall equal an 

additional 2% per annum; 

 

1

 Capitalized terms used herein but not otherwise defined herein shall have the meaning given to them in the DIP 

Credit Agreement. 

2

 The DIP Facilities also provide the Debtors the flexibility to obtain up to an additional $4.0 billion in incremental 

term loan and/or revolving commitments, subject to further approval by the Court and satisfaction or waiver of customary 

conditions. 

Case: 19-30088 Doc# 23 Filed: 01/29/19 Entered: 01/29/19 02:24:53 Page 9 of 42
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(b) Maturity Date: December 31, 2020, subject to the Borrower’s option to extend 

the term by additional 12 months in accordance with the terms and conditions 

of the DIP Credit Agreement including the payment of a 25 bps extension fee 

on the then outstanding loans and commitments; 

(c) Events of Default: Material events of default include: 

i. Default in payment obligations; 

ii. Inaccuracy of representations and warranties when made or deemed made 

or breach of covenant; 

iii. Cross-default to other postpetition or unstayed indebtedness 

iv. Entry of unstayed judgments; 

v. Invalidity of loan documents, security interests or guarantees 

vi. Dismissal or conversion of cases to a case under chapter 7; 

vii. Appointment of a trustee, responsible officer or an examiner having 

expanded powers under Bankruptcy Code 1104 (other than (x) a fee 

examiner or (y) for purposes of an investigation pursuant to Sections 

1106(a)(3) and (4) of the Bankruptcy Code); 

viii. Entry of an order (1) staying, reversing, vacating, modifying or amending 

the Interim Order or Final Order, (2) granting relief from stay, (3) 

impairing rights of Agents and Lenders or avoiding any amounts received 

in respect of the DIP Obligations, (4) authorizing financing or sale of 

substantially all assets without the repayment of DIP Loans or (5) except 

as permitted by the DIP Loan Documents, granting senior or pari passu 

liens or superpriority claims; 

ix. Filing by the Debtors or confirmation of a reorganization plan that does 

not require the repayment of the DIP Loans; 

x. Final Order not being entered by April 15, 2019; 

xi. Any governmental authority preventing the Debtors from conducting any 

material part of their business; 

xii. Loss, revocation or termination of any license, permit, lease or agreement 

necessary and material to Debtors’ business, or the cessation of any 

material part of the Loan Parties’ business for a material period of time; 

and 

xiii. A material portion of the DIP Collateral, taken as a whole, shall be taken 

or impaired through condemnation or shall have been materially 

damaged, and the consideration or insurance proceeds, as applicable, 

received therefor shall be materially less than the fair market value 

thereof; 

(d) Borrowing Limits: The Interim Order contemplates $1.5 billion being made 

available under the DIP Revolving Credit Facility upon entry of the Interim 

Order (and the satisfaction of all other closing conditions) and the remaining 

$4.0 billion being made available upon entry of the Final Order (and the 

satisfaction of all other closing conditions); 

(e) Conditions to Closing: Material closing conditions include: 

i. Execution of DIP Credit Agreement; 

ii. The payment of fees and expenses set forth in the DIP Loan Documents; 

iii. The accuracy of all representations and warranties and the absence of a 

default or event of default; 

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iv. Receipt of a valid and perfected security interest in the Collateral; 

v. Receipt of a 13-week cash flow forecast and projections through 

December 31, 2020; 

vi. Entry of Interim Order authorizing DIP Loans no later than five business 

days following the Petition Date; 

vii. Entry of all other first day orders; and 

viii. Absence of proceedings pending or, to the knowledge of the Borrower, 

threatened that is not stayed and that could reasonably be expected to 

result in a material adverse change; 

(2) Issue Guarantees – authorizing the Guarantors3 (together with the Borrower, the 

“Loan Parties”) to jointly and severally guarantee on a senior secured superpriority 

basis the DIP Loans and the DIP Obligations (as defined below); 

(3) Entry into DIP Loan Documents – authorizing the Debtors to execute and deliver the 

DIP Credit Agreement and other documentation, including security agreements, pledge 

agreements, mortgages, guaranties, promissory notes, certificates, instruments, 

commitment letters, the Fee Letters (as defined below), and such other documentation 

which may be necessary or required to implement the DIP Facilities and perform 

thereunder and/or that may be reasonably requested by the DIP Administrative Agent, 

in each case, as amended, restated, supplemented or otherwise modified from time to 

time in accordance with the terms thereof and hereof (collectively, together with the 

DIP Credit Agreement, the “DIP Loan Documents”; all loans, advances, extensions 

of credit, financial accommodations, reimbursement obligations, fees (including, 

without limitation, commitment fees, administrative agency fees and other fees payable 

pursuant to the Fee Letters), costs, expenses and other liabilities, all other obligations 

(including indemnities and similar obligations, whether contingent or absolute) and all 

other amounts due or payable under the DIP Loan Documents, collectively, the “DIP 

Obligations”), and to perform such other and further acts as may be necessary, 

desirable or appropriate in connection therewith; 

(4) Liens and Superpriority Claims – granting to the DIP Agents for the benefit of the 

DIP Lenders (collectively, the “DIP Secured Parties”) allowed superpriority 

administrative claims pursuant to section 364(c)(1) of the Bankruptcy Code in respect 

of all DIP Obligations, and valid, enforceable, non-avoidable and automatically 

perfected liens on and security interests in all DIP Collateral (as defined below), 

pursuant to sections 364(c)(2) and 364(c)(3) of the Bankruptcy Code, to secure the DIP 

 

3

 As of the date hereof, only PG&E Corp. is a Guarantor under the DIP Loan Documents. 

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Obligations, in each case as subject to the Carve-Out set forth in the Interim Order or 

Final Order, as applicable; 

(5) Payment of Fees and Expenses – authorizing the Debtors to pay all fees, costs and 

expenses due pursuant to the DIP Credit Agreement, the other DIP Loan Documents 

and the Fee Letters; 

(6) Stay Relief – vacating or modifying the automatic stay imposed by section 362 of the 

Bankruptcy Code to the extent necessary to implement and effectuate the terms and 

provisions of the Interim Order or Final Order, as applicable; 

(7) Schedule Final Hearing – scheduling a final hearing (the “Final Hearing”) to 

consider entry of the Final Order granting the relief requested in this Motion on a final 

basis and approving the form of notice with respect to the Final Hearing and the 

transactions contemplated by the Motion; and 

(8) Waiver of Stay – waiving any applicable stay (including under Bankruptcy Rule 6004) 

with respect to the effectiveness and enforceability of the Interim Order and providing 

for the immediate effectiveness of the Interim Order or Final Order, as applicable. 

In support of the relief requested herein, the Debtors submit the Declarations of Jason P. Wells 

in Support of First Day Motions and Related Relief (the “Wells Declaration”) and David Kurtz in 

Support of Motion of Debtors for Interim and Final Orders (I) Authorizing Debtors to Obtain Senior 

Secured, Superpriority, Postpetition Financing, (II) Granting Liens and Superpriority Claims, (III) 

Modifying the Automatic Stay, (IV) Scheduling Final Hearing and (V) Granting Related Relief (the 

“Kurtz Declaration”), each filed contemporaneously herewith. 

 

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CERTIFICATION 

The undersigned counsel for the Debtor has read the Motion; to the best of my knowledge, 

information, and belief, formed after reasonable inquiry, the terms of the relief sought in the Motion

are in conformity with the Court’s Guidelines for Cash Collateral and Financing Motions and 

Stipulations, except as set forth herein. I understand and have advised the Debtor that the Court may 

grant appropriate relief under Bankruptcy Rule 9024 if the Court determines that a material element 

of the Motion was not adequately disclosed in the Introductory Statement. 

Dated: January 29, 2019 CRAVATH, SWAINE & MOORE LLP

WEIL, GOTSHAL & MANGES LLP 

KELLER & BENVENUTTI LLP 

By: /s/ Tobias S. Keller

Tobias S. Keller 

Proposed Attorneys for Debtors and Debtors in Possession 

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MEMORANDUM AND POINTS OF AUTHORITIES 

Following a competitive marketing process, the Debtors secured a commitment from a group 

of lenders led by JPMorgan, Bank of America, N.A., Barclays Bank PLC, Citibank, N.A., BNP Paribas 

Securities Corp., Credit Suisse Loan Funding LLC, Goldman Sachs Bank USA, MUFG Union Bank, 

N.A. and Wells Fargo Securities, LLC to provide a $5.5 billion secured, superpriority postpetition 

financing facilities (the “DIP Facilities”) that will enable the Debtors to fund their operations, develop 

a restructuring plan, and emerge from chapter 11, while continuing to provide safe and reliable gas 

and electric service to their millions of customers throughout California. By this Motion, the Debtors 

seek approval of the DIP Facilities. The Debtors also seek authority to access $1.5 billion of the 

proceeds of the DIP Facilities immediately to avoid irreparable harm to their businesses and to enable

them to continue operating through the final hearing on this Motion. 

PG&E initiated these Chapter 11 Cases to address extraordinary financial challenges. The 

Debtors face over $30 billion in potential exposure for the catastrophic wildfires that occurred in 

Northern California in 2017 and 2018 (the “Wildfires”), a figure that excludes potential punitive 

damages, fines and penalties and is expected to rise as additional lawsuits and claims are filed. That 

potential exposure has resulted in a severe deterioration of the Debtors’ credit profile and liquidity

position, and PG&E has drawn most available credit, leaving, as of January 29, 2019, only $35 million 

in aggregate undrawn commitments under their existing revolving credit facilities. In addition, recent 

ratings downgrades and the Company’s delivery of a notice to employees pursuant to Senate Bill 901, 

Public Utilities Code § 854.2(d) (“SB 901”), “pre-announcing” the Chapter 11 Cases, have led to 

increased cash collateral obligations and contraction in trade terms, further deteriorating the 

Company’s liquidity position. The Utility’s liquidity was depleted by an aggregate of approximately 

$811 million to satisfy collateral posting needs, address accelerated payment and pre-pay demands of 

energy commodity suppliers, and address requests from other essential suppliers for shortened 

payment terms. As of the filing, Utility had cash on hand of approximately $240 million, net of 

customer deposits and cash held from counterparties of approximately $250 million. 

On the other hand, the Debtors have a strong base of largely unencumbered assets. 

Accordingly, the Debtors have been able to attract substantial postpetition financing on favorable 

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terms. Prior to entering into the DIP Facilities, the Debtors and their advisors engaged in a competitive 

marketing process that included soliciting and receiving bids from eight large financial institutions 

and engaging in multiple rounds of negotiations with a select group of parties submitting the most 

competitive bids. In the business judgment of PG&E and its advisors, the resulting DIP Facilities 

represent the best credit available to the Debtors under the circumstances and the financing is in the

best interests of the Debtors’ estates. 

PG&E and its financial advisors sized the proposed facility based on projections of PG&E’s 

cash flow for the anticipated duration of these Chapter 11 Cases, taking into account the minimum 

working capital required to operate the Debtors’ businesses. PG&E and its advisors have determined 

that PG&E will need to access $1.5 billion of the proceeds of the DIP Facilities to enable it to operate 

its business in an appropriate and prudent manner through the Final Hearing. (See Wells Decl. at 23.) 

The DIP Facilities consist of three components: (a) the DIP Revolving Credit Facility with 

aggregate commitments of $3.5 billion, including a DIP L/C Sub-Facility in an aggregate amount of 

$1.5 billion; (b) the DIP Term Loan Facility in an aggregate principal amount of $1.5 billion; and 

(c) the DIP Delayed Draw Term Loan Facility in an aggregate principal amount of $500 million. The 

DIP Facilities also provide the Debtors the flexibility to obtain up to an additional $4.0 billion in 

incremental term loan and/or revolving commitments, subject to further approval by the Court and 

satisfaction or waiver of customary conditions. 

The DIP Facilities are critical to ensuring that PG&E will be able to continue providing safe 

and reliable gas and electric service to its millions of customers while it undergoes restructuring. 

PG&E believes that it is in the best interest of all stakeholders for it to obtain the DIP Facilities. PG&E 

therefore respectfully requests that the Court approve the DIP Facilities on an interim basis and permit 

PG&E to use up to $1.5 billion of the proceeds of the DIP Facilities as contemplated by the DIP Credit

Agreement pending the Final Hearing. This proposed postpetition financing is necessary to restore 

financial stability to PG&E as it undergoes reorganization and access to the interim amount is critical 

to avoid immediate and irreparable harm not only to the Debtors but also to the 16 million customers 

in the State of California who rely on the electricity and gas services provided by the Debtors. 

Accordingly, PG&E respectfully requests that the relief requested herein be granted. 

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I. JURISDICTION 

The Court has jurisdiction to consider this matter pursuant to 28 U.S.C. §§ 157 and 1334. This 

is a core proceeding pursuant to 28 U.S.C. § 157(b)(2). Venue is proper before the Court pursuant to 

28 U.S.C. §§ 1408 and 1409. 

II. BACKGROUND 

PG&E Corp. is a holding company whose primary operating subsidiary is the Utility, a public 

utility operating in northern and central California. The Utility provides natural gas and utility services 

to approximately 16 million customers in California. As of September 30, 2018, the Debtors, on a 

consolidated basis, had a reported book value of assets and liabilities of approximately $71.4 billion

and $51.7 billion, respectively. 

On the date hereof (the “Petition Date”), each of the Debtors commenced with this Court a

voluntary case under chapter 11 of the Bankruptcy Code. The Debtors continue to manage and operate 

their businesses as debtors in possession under Bankruptcy Code sections 1107 and 1108. No trustee, 

examiner or statutory committee of creditors has been appointed in these Chapter 11 Cases. 

Contemporaneously herewith, the Debtors have filed a motion requesting joint administration 

of the Chapter 11 Cases pursuant to Bankruptcy Rule 1015(b). 

Additional information regarding PG&E’s business, capital structure, and the circumstances 

leading to the commencement of these Chapter 11 Cases is set forth in the Wells Declaration, 

incorporated herein by reference. 

III. OVERVIEW OF PROPOSED DIP FACILITIES 

The Debtors propose to enter into the DIP Facilities to fund their operations and the 

administration of the Debtors’ Chapter 11 Cases. The DIP Facilities preserve the Debtors’ operations 

and provide the Debtors with sufficient liquidity to fund their businesses and the administration of 

these cases and to pursue and consummate a successful restructuring. The DIP Facilities were 

negotiated in good faith and at arm’s length. As discussed below and in the Kurtz Declaration, the 

DIP Facilities are the best postpetition financing option available to the Debtors and should be 

approved. 

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In accordance with Bankruptcy Rules 4001(c) and (d), the following table summarizes the 

material terms of the Interim Order and the DIP Facilities.4 

Material Terms Summary Citation 

Borrower 

Fed. R. Bankr. P. 

4001(c)(1)(B) 

Pacific Gas and Electric Company (the “Borrower”). See DIP Credit 

Agreement; Interim 

Order (preamble)

Guarantors 

Fed. R. Bankr. P. 

4001(c)(1)(B) 

PG&E Corporation, together with any of its subsidiaries (other 

than the Borroers) that subsequently become party to the DIP 

Credit Agreement (the “Guarantors” and, collectively with the 

Borrower, “PG&E”). 

See DIP Credit 

Agreement; Interim 

Order (preamble)

DIP Lenders 

Fed. R. Bankr. P. 

4001(c)(1)(B)

The several lenders from time to time party to the DIP Credit 

Agreement (collectively, together with the Issuing Lenders (as 

defined below), the “DIP Lenders”). JPMorgan Chase Bank, 

N.A., Bank of America, N.A., Barclays Bank PLC, Citibank, 

N.A., BNP Paribas, Credit Suisse AG, Goldman Sachs Bank 

USA, MUFG Union Bank, N.A. and Wells Fargo Bank, National 

Association, also serve as issuing lenders under the DIP L/C 

Sub-Facility (each, an “Issuing Lender”). 

See DIP Credit 

Agreement; Interim 

Order (preamble)

DIP Agents 

Fed. R. Bankr. P. 

4001(c)(1)(B) 

JPMorgan Chase Bank, N.A. is the administrative agent (in such 

capacity, the “DIP Administrative Agent”). Citibank, N.A. is 

the collateral agent (in such capacity, the “DIP Collateral 

Agent” and, together with the DIP Administrative Agent, the 

“DIP Agents”). 

See DIP Credit 

Agreement; Interim 

Order (preamble)

Lead Arrangers and 

Bookrunners 

Fed. R. Bankr. P. 

4001(c)(1)(B)

J.P. Morgan Securities LLC, Merrill Lynch, Pierce, Fenner & 

Smith Incorporated, Barclays Bank PLC, Citibank, N.A., BNP 

Paribas Securities Corp., Credit Suisse Loan Funding LLC, 

Goldman Sachs Bank USA, MUFG Union Bank, N.A. and Wells 

Fargo Securities, LLC. 

See DIP Credit 

Agreement

DIP Facilities 

Fed. R. Bankr. P. 

4001(c)(1)(B) 

The DIP Facilities provide for (a) a first lien superpriority 

revolving credit facility in an aggregate principal amount of $3.5 

billion, which includes a $1.5 billion letter of credit sub-facility, 

(b) first lien superpriority term loans in an aggregate principal 

amount of $1.5 billion and (c) first lien superpriority delayed 

draw term loans in an aggregate principal amount of $500 

million. 

See DIP Credit 

Agreement (§ 2.1; 3); 

Interim Order 

(preamble)

Borrowing Limits 

Fed. R. Bankr. P. 

4001(c)(1)(B)

The Interim Order contemplates $1.5 billion being made 

available under the DIP Revolving Credit Facility upon entry of 

the Interim Order (and the satisfaction of all other closing 

conditions) and the remaining $4.0 billion being made available 

upon entry of the Final Order (and the satisfaction of all other 

closing conditions).

See DIP Credit 

Agreement (§ 1.1); 

Interim Order 

(preamble and 

¶¶ 3(d))

 

4

 As noted above, see note 1 supra, all capitalized terms listed in this table but not otherwise defined herein shall have 

the meaning ascribed to such terms in the DIP Credit Agreement. Any summary of the terms of the Interim Order and DIP 

Facilities contained in this Motion is qualified in its entirety by reference to the provisions of the actual Interim Order and 

DIP Credit Agreement, as applicable. To the extent the Motion and the Interim Order or DIP Credit Agreement are 

inconsistent, the Interim Order or DIP Credit Agreement, as applicable, shall control. The Debtors reserve the right to 

supplement the statements made pursuant to Bankruptcy Rule 4001 herein. 

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Material Terms Summary Citation 

Incremental 

Availability

Fed. R. Bankr. P. 

4001(c)(1)(B) 

The DIP Credit Agreement provides that the Borrower may seek 

commitments from lenders to provide, and may incur,

incremental loans and commitments secured on a pari passu

basis with the DIP Loans in an aggregate principal amount of up 

to $4.0 billion, subject to the terms and conditions and approval 

of the Bankruptcy Court. 

See DIP Credit 

Agreement (§ 2.3)

13-Week Forecasts 

Fed. R. Bankr. P. 

4001(c)(1)(B) 

PG&E will provide the DIP Agents 13-week cash flow forecasts 

on a rolling 4-week and cumulative basis (updated at the end of 

each 4-week period) and monthly variance reports. 

See DIP Credit 

Agreement (§ 6.2)

Use of DIP Proceeds 

Fed. R. Bankr. P. 

4001(c)(1)(B)

The DIP Facilities proceeds shall be used (i) for working capital 

and general corporate purposes and (ii) to pay fees, costs and 

expenses incurred in connection with DIP Facilities and 

professional and other fees and costs of administration incurred 

in connection with the Chapter 11 Cases. 

See DIP Credit 

Agreement (§ 4.12); 

Interim Order [¶ 6]

Interest Rates 

Fed. R. Bankr. P. 

4001(c)(1)(B)

1. DIP Revolving Loans – shall accrue interest at L+225 bps 

per annum.

2. DIP Term Loans and DIP Delayed Draw Term Loans – 

shall accrue interest at L+250 bps per annum.

3. Default Interest – additional 2% per annum.

See DIP Credit 

Agreement (§ 2.9)

Expenses and Fees 1. DIP Revolving Credit Facility Unused Fees: 0.375% per 

annum for undrawn availability under the Revolving Credit

Facility.

2. DIP Delayed Draw Term Loan Facility Unused Fees: (a) 

from (and including) the Allocation Date to (and including) 

the date that is 180 days after the Allocation Date, 1.25% per 

annum, and (b) from (and including) the date that is 181 days 

after the Allocation Date to (and including) the last day of the 

Delayed Draw Commitment Period, 2.50% per annum, in

each case for undrawn Delayed Draw Term Loans. 

3. L/C Fronting Fee: 0.125% per annum payable to the 

applicable Issuing Lender on the outstanding face amount of 

each letter of credit.

4. L/C Participation Fee: 2.25% per annum on the 

outstanding face amount of each letter of credit.

5. Extension Fee: 0.25% (12 month extension).

Other fees are set forth in the fee letters to be provided under seal 

to the Court and the U.S. Trustee. 

See DIP Credit 

Agreement (§§ 1.1, 

2.5 and 3.3) 

Maturity Date 

Fed. R. Bankr. P. 

4001(c)(1)(B) 

December 31, 2020, subject to the Borrower’s option to extend 

the term by additional 12 months in accordance with the terms 

and conditions of the DIP Credit Agreement, including the 

payment of a 25 bps extension fee on the then outstanding loans 

and unused commitments. 

See DIP Credit 

Agreement (§§ 1.1, 

2.5)

Mandatory 

Prepayments 

Net cash proceeds from (i) non-ordinary course asset sales and 

condemnation events required to be used to prepay term loans, 

subject to the ability to reinvest proceeds in the business within 

360 days of receipt in lieu of making such prepayment, provided 

that (1) the first $4.0 billion of proceeds not so reinvested shall 

not be required to be used to prepay term loans and (2) 

thereafter, proceeds not so reinvested shall only be required to be 

used to prepay term loans once such proceeds are in excess of 

See DIP Credit 

Agreement (§ 2.6(b))

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Material Terms Summary Citation 

$500 million or (ii) incurrence by PG&E Corp. or any of its 

subsidiaries of indebtedness that is not permitted to be incurred 

under the DIP Credit Agreement. 

Collateral and Priority 

Fed. R. Bankr. P. 

4001(c)(1)(B)(i)

Collateral – substantially all owned or hereafter acquired assets 

and property of the Borrower and Guarantors (the “Collateral”). 

Priority - the Collateral Agent shall be granted the following on 

the Collateral, for the benefit of the Lenders: 

a) First Priority Liens - a perfected first priority security 

interest and lien on the Collateral to the extent such 

Collateral is not subject to valid, perfected and nonavoidable liens (“First Priority Liens”), subject to the 

Carve-Out and any Senior Permitted Liens; 

b) Junior Liens – a junior perfected security interest and lien 

on the Collateral to the extent such Collateral is subject to 

valid, perfected and non-avoidable liens in favor of third 

parties that were in existence on the the Petition Date, or to 

valid and unavoidable liens in favor of third parties that were 

in existence on the Petition Date that were perfected 

subsequent to the Petition Date (“Junior Liens”, collectively 

with the First Priority Liens, the “DIP Liens”), subject to 

such valid liens, the Carve-Out and any Senior Permitted 

Liens; and 

d) Superpriority Expense Claims – superpriority 

administrative expense claims in the Chapter 11 Cases of the 

Debtors (“Superpriority Expense Claims”), subject to the 

Carve-Out. 

See DIP Credit 

Agreement ((§ 2.19); 

Interim Order, ¶ 3, 4

Conditions to 

Closing 

Fed. R. Bankr. P. 

4001(c)(1)(B)

Material closing conditions include: 

• Execution of DIP Credit Agreement 

• The payment of fees and expenses set forth in the DIP Loan 

Documents 

• The accuracy of all representations and warranties and the 

absence of a default or event of default 

• Receipt of a valid and perfected security interest in the 

Collateral 

• Receipt of a 13-week cash flow forecast and projections 

through December 31, 2020 

• Entry of Interim Order authorizing DIP Loans no later than 

five business days following the Petition Date 

• Entry of all other first day orders 

• Absence of proceedings pending or, to the knowledge of the 

Borrower, threatened that is not publicly disclosed, that is 

not stayed and that could reasonably be expected to result in 

a material adverse change 

See DIP Credit 

Agreement (§ 5.1)

Events of Default 

Fed. R. Bankr. P. 

4001(c)(1)(B)

Material events of default include: 

• Payment default 

• Inaccuracy of representations and warranties when made or 

deemed made 

See DIP Credit 

Agreement (§ 8)

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Material Terms Summary Citation 

• Breach of covenant 

• Cross-default to postpetition or unstayed indebtedness in 

excess of $200M 

• Certain ERISA events rising to a material adverse effect 

• Entry of unstayed judgments in excess of $200M 

• Invalidity of loan documents, security interests or

guarantees 

• Dismissal of cases or conversion thereof to cases under 

chapter 7 

• Appointment of a trustee, responsible officer or an examiner 

having expanded powers under Bankruptcy Code Section 

1104 

• Entry of an order: 

• Staying, reversing, vacating, modifying or amending

the interim or final order in a manner adverse to the 

lenders 

• Granting relief from any stay allowing third party to 

proceed to foreclosure against assets in excess of 

$250M 

• Authorizing liens or administrative expense claims 

having a priority senior to or pari passu with those in 

favor of the DIP Obligations 

• Impairing any material rights and remedies of the 

lenders, impairing the liens securing the DIP 

Obligations or impairing the DIP Obligations 

themselves 

• Any debtor taking action to (or failing to take action to 

oppose any action by a third party to) impair material rights 

and remedies of the lenders or impair the liens securing the 

DIP Obligations or impairing the DIP Obligations 

themselves 

• Final Order not being entered prior to April 15, 2019 

• Material noncompliance with the terms of the Interim Order 

or the Final Order 

• Action by the Debtors or their subsidiaries against the 

lenders regarding the DIP Loan Documents 

• Filing by the Debtors of, or the entry of an order approving, 

a reorganization plan or a sale of substantially all assets 

under Section 363 that does not provide for the repayment 

of the DIP Loans 

• Change of control 

• Any governmental authority shall prevent the Debtors from 

conducting any material part of their business, with such 

prevention rising to a material adverse effect 

• Loss of any license, permit, lease or agreement necessary 

and material to Debtors’ business, or the cessation of any 

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Material Terms Summary Citation 

material part of the Debtors’ business for a material period 

of time 

• A material portion of the DIP Collateral is taken through 

condemnation or materially damaged and the Debtors’

receive materially less than fair market value in 

consideration or insurance proceeds 

Milestones 

Fed. R. Bankr. P. 

4001(c)(1)(B)(vi) 

No milestones related to assets sales or a plan of reorganization. N/A 

Waiver or 

Modification of the 

Automatic Stay 

Fed. R. Bankr. P. 

4001(c)(1)(B)(iv)

The automatic stay shall be modified as necessary to permit the 

granting of DIP Liens and to incur all DIP Obligations under the 

DIP Loan Documents and to authorize the DIP Agents to retain 

and apply payments and to exercise the rights and remedies set 

forth in the Interim Order or Final Order, as applicable. 

See Interim Order 

¶¶ 6, 14.

Waiver or 

Modification of 

Applicability of NonBankruptcy Law 

Relating to the 

Perfection or 

Enforcement of a Lien 

Fed. R. Bankr. P. 

4001(c)(1)(B)(vii)

The Interim Order is sufficient and conclusive evidence of the 

validity, perfection and priority of the DIP Liens without the 

necessity of filing or recording any financing statement, deed of 

trust, mortgage, or other instrument or document which may 

otherwise be required under the law of any jurisdiction or the 

taking of any other action to validate or perfect the DIP Liens or 

to entitle the DIP Liens to the priorities granted in the Interim 

Order or the Final Order, as applicable. 

See Interim Order ¶¶ 

3, 4

Carve-Out 

Fed. R. Bankr. P. 

4001(c)(1)(B)(i)

The DIP Liens and the DIP Superpriority Claim shall be subject 

and subordinate to a carve-out (the “Carve-Out”), which shall 

comprise the following: (i) all fees required to be paid to the 

Clerk of the Court and to the Office of the U.S. Trustee pursuant 

to 28 U.S.C. § 1930(a) plus interest at the statutory rate (without 

regard to the notice set forth in (iii) below); (ii) all reasonable 

and documented fees and expenses, in an aggregate amount not 

to exceed $100,000, incurred by a trustee under section 726(b) of 

the Bankruptcy Code (without regard to the notice set forth in 

(iii) below); and (iii) all accrued and unpaid fees, costs and 

expenses (the “Estate Professional Fees”) incurred by persons 

or firms retained by the Debtors (including for the avoidance of 

doubt, Cravath, Swaine & Moore LLP and Weil Gotshal & 

Manges LLP) or any Committee, if any, pursuant to 

sections 327, 328, 330, 363 or 1103 of the Bankruptcy Code 

(collectively, “Estate Professionals”) (x) at any time before or 

on the day of delivery by the DIP Agents of a Carve-Out Trigger 

Notice (defined below), whether allowed by the Court prior to or 

after delivery of a Carve-Out Trigger Notice, and (y) after the 

date (the “Trigger Date”) on which the DIP Agents provide 

written notice stating that such notice is a “Carve-Out Trigger 

Notice” (the “Carve-Out Trigger Notice”) that a DIP 

Termination Event has occurred and has triggered the Carve-Out, 

to the extent allowed at any time, the payment of any Estate 

Professional Fees of Estate Professionals in an amount not 

exceeding $25,000,000 in the aggregate incurred after the 

Trigger Date (the “Post-Carve-Out Trigger Notice Cap”). 

See Interim Order 

¶ 10

Liens on Avoidance 

Actions 

Collateral will include proceeds of causes of action arising under 

Chapter 5 of the Bankruptcy Code. 

See DIP Credit 

Agreement (§ 11.1), 

Interim Order ¶ 5

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Material Terms Summary Citation 

Fed. R. Bankr. P. 

4001(c)(1)(B)(xi)

Section 506(c) Waiver

Fed. R. Bankr. P. 

4001(c)(1)(B)(x)

Upon entry of the Final Order, no costs or expenses which have 

been or may be incurred in the Cases at any time shall be 

charged against the DIP Administrative Agent, the DIP Lenders, 

the DIP Obligations or the DIP Collateral. 

See Interim Order 

¶ 23 

Certain of the terms of the DIP Facilities are terms that are identified in the Court’s Guidelines 

for Cash Collateral and Financing Stipulations (the “Guidelines”) as provisions that the Court will 

not ordinarily approve. For the reasons set forth herein, the Debtors submit that such terms are 

necessary and appropriate in the circumstances of this case because the Lead Arrangers insisted on 

these provisions in return for extending $5.5 billion of credit on favorable pricing and other terms. 

Guidelines Provision DIP Facilities Description 

1 

Cross-collateralization clauses, i.e., clauses that secure 

prepetition debt by postpetition assets in which the secured 

party would not otherwise have a security interest by virtue 

of its prepetition security agreement or applicable law. See

Bankruptcy Code § 552. 

None.

2 

“Roll-ups,” i.e., such as provisions deeming pre-petition 

debt to be post-petition debt or using post-petition loans 

from a pre-petition secured creditor to pay part or all of that 

secured creditor’s pre-petition debt, other than as provided 

in Bankruptcy Code § 552(b), which deals with security 

interests in proceeds and profits.

None.

3 

Provisions or findings of fact that bind the estate or all 

parties-in-interest with respect to the validity, perfection or 

amount of the prepetition secured party’s lien or debt.

None.

4 

Provisions or findings of fact that bind the estate or all 

parties-in-interest with respect to the relative priorities of 

the secured party’s lien and liens held by persons who are 

not party to the stipulation (This would include, for 

example, an order approving a stipulation providing that the 

secured party’s lien is a “first priority” lien). 

None.

5 

Waivers of, or grants of lien on, rights under Bankruptcy 

Code §506(c), unless the waiver or grant is effective only 

during the period in which the debtor is authorized to use 

cash collateral or borrow funds. (Otherwise a future trustee 

might be faced with a duty to care for and preserve

collateral in the trustee’s possession and no financial means 

for discharging that duty). 

Paragraph 23 of the Interim Order provides that, 

upon entry of the Final Order, PG&E will waive its 

right to surcharge the DIP Secured Parties for 

administrative costs or expenses. 

6 

Provisions that operate, as a practical matter, to divest the 

debtor in possession or trustee of any discretion in the 

formulation of a plan or administration of the estate or limit 

access to the court to seek any relief under other applicable 

provisions of law. 

Section 8(n) of the DIP Credit Agreement provides 

that it is an “Event of Default” under the DIP Credit 

Agreement if Debtors file a Chapter 11 plan other 

than an “Acceptable Plan”, defined in part as a 

Chapter 11 plan that does not provide for the 

indefeasible payment in full in cash of the DIP 

Obligations.

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Guidelines Provision DIP Facilities Description 

7 

Releases of, or limitations on, liability for the creditor’s 

alleged prepetition torts or breaches of contract. 

None.

8 

Waivers of, or liens on any of the estate’s rights arising 

under Bankruptcy Code §§ 544, 545, 547, 548, 549, 553, 

723(a), or 724(a), or the proceeds of any such rights. 

Section 11.1 of the DIP Credit Agreement and 

paragraph 5 of the Interim Order provide for the 

grant, following the entry of the Final Order, to the 

DIP Secured Parties of DIP Liens on all proceeds of

claims or causes of action arising under Chapter 5 of 

the Bankruptcy Code. 

9 

Automatic relief from the automatic stay upon default, 

conversion to Chapter 7, or appointment of a trustee. 

Paragraph 18 of the Interim Order provides that the

DIP Secured Parties are entitled to automatic relief 

from the automatic stay after the occurrence of a DIP 

Termination Event and a seven day Remedies Notice 

Period. During the Remedies Notice Period, the 

Debtors and other parties in interest may challenge

such Dip Termination Event. 

10 

Waivers and modifications of the procedural requirements 

for foreclosure mandated under applicable non-bankruptcy 

law.

None.

11 

Waivers or limitations, effective on default or expiration, of 

the debtor in possession’s or trustee’s right to move for a 

court order pursuant to Bankruptcy Code § 363(c)(2)(B) 

authorizing the use of cash collateral in the absence of the 

secured party’s consent.

None.

12 

Findings of fact on matters extraneous to the approval 

process. (For example, in connection with an application to 

borrow on a secured basis, a finding that the debtor cannot 

obtain unsecured credit would be acceptable if supported by 

competent evidence, whereas a “finding” that the lender 

acted in good faith in declaring the prepetition loan in 

default would not be acceptable). 

None.

13 

Provisions providing unreasonable treatment with respect to 

fees or professionals retained by a creditors’ committee 

compared to any carve-outs provided for professionals 

retained by the debtor in possession or trustee.

None.

14 

Provisions that provide an inadequate carve-out for a 

subsequently appointed trustee in the case, whether before 

or after conversion.

Paragraph 10 of the Interim Order provides for a 

carve-out of $100,000 for a subsequently appointed 

trustee. 

IV. PG&E’S PREPETITION FINANCING 

PG&E’s prepetition financing consists entirely of unsecured debt. (See Wells Decl. at 9-11.) 

As described in more detail below, PG&E’s unsecured debt (not including any potential liabilities 

associated with the Wildfires) consists of revolving credit facilities, term loans, senior notes, pollution 

control bonds, and trade payables. 

A. Revolving Credit Facilities 

Each of PG&E Corp. and the Utility is party to a separate revolving credit agreement with 

Bank of America, N.A., and Citibank, N.A., respectively, as administrative agents (collectively the 

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“Revolving Credit Facilities”). The Revolving Credit Facilities permit borrowing by PG&E Corp. 

up to aggregate principal amount of $300 million and by the Utility up to an aggregate principal 

amount of $3 billion. (Wells Decl. at 9-10.) On November 13, 2018, PG&E Corp. and the Utility 

drew all amounts available under their respective Revolving Credit Facilities to assure access to 

additional liquidity. (Id. at 18) As of January 29, 2019, PG&E Corp. and the Utility collectively had 

only about $35 million of aggregate undrawn commitments under the two Revolving Credit Facilities. 

All obligations under the Revolving Credit Facilities are unsecured. In addition, the 

obligations under the Utility’s Revolving Credit Facility are not guaranteed by PG&E Corp. and the 

obligations under PG&E Corp.’s Revolving Credit Facility are not guaranteed by the Utility. (Id. at 

10.) 

B. Term Loans 

The Debtors are also parties to unsecured term loans. PG&E Corp. has an outstanding 

unsecured term loan in the principal amount of $350 million that matures on April 16, 2020. The 

Utility has an outstanding unsecured term loan in the principal amount of $250 million that matures 

on February 22, 2019. (Id.) 

C. Senior Notes 

The Utility has outstanding various issues of senior notes (the “Senior Notes”) with varying 

interest rates and maturities ranging from 2020 to 2047, in the aggregate outstanding principal amount

of approximately $17.5 billion. The Senior Notes are unsecured obligations of the Utility and are not

guaranteed by PG&E Corp. (Id.) 

D. Pollution Control Bonds 

The Utility is also obligated with respect to government-issued pollution control bonds. 

Specifically, the California Pollution Control Financing Authority and the California Infrastructure 

and Economic Development Bank have issued various series of fixed-rate and multi-modal tax-exempt 

pollution control bonds for the benefit of the Utility in the aggregate outstanding principal amount of 

approximately $860 million. Approximately $760 million in principal amount of such pollution 

control bonds are backed by letters of credit. The obligations under the reimbursement agreements 

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entered into by the Utility in connection with the issuance of the letters of credit are unsecured 

obligations of the Utility and are not guaranteed by PG&E Corp. (Id. at 11.) 

E. Trade Payables 

As of the Petition Date, PG&E’s outstanding trade payables totaled approximately $2.1 billion. 

V. BACKGROUND TO THE PROPOSED POSTPETITION FINANCING 

A. The Debtors’ Liquidity 

As described in the Wells Declaration, PG&E’s potential liability with respect to the Wildfires 

has resulted in a severe deterioration of the Debtors’ credit profile and liquidity position. (See Wells 

Decl. at 11-16 (describing the Wildfires and potential liabilities), id. 18-19 (describing the 

deterioration of the Debtors’ credit profile and liquidity position.) During 2018 and 2019, the Debtors’ 

credit ratings were subject to multiple downgrades by the credit agencies, and are currently related 

below “investment grade” by all three major rating agencies. (Id. at 18-19.) On November 13, 2018, 

PG&E Corp. and the Utility drew all amounts available under their respective Revolving Credit 

Facilities to ensure access to additional liquidity. (Id. at 18.) 

In recent weeks, there has been significant further deterioration of the Debtors’ liquidity 

position. On January 7 and 10, 2019, the Debtors’ credit rating was downgraded further, triggering a 

requirement that PG&E post substantial cash collateral in connection with its power purchase and 

other supply arrangements. (Id. at 18.) Other requests for cash collateral have been made by third 

parties, including the California State Division of Workers’ Compensation, and in connection with 

State environmental remediation projects. (Id.) The Debtors’ credit profile has further deteriorated 

due to potential impending defaults under the agreements governing PG&E’s existing funded debt and 

a significant contraction in customary trade terms. (Id.) In addition, recent developments in ongoing 

government investigations and enforcement actions also have negatively affected PG&E’s liquidity 

position. (Id.) 

To preserve liquidity, on January 15, 2019, PG&E did not make the interest payment of 

approximately $21.6 million with respect to its outstanding 5.40% of Senior Notes due January 15, 

2040. (Id. at 19.) 

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Such deterioration was further exacerbated by the Company’s notice to employees on January 

14, pursuant to SB 901, that PG&E Corp. and the Utility intended to make a voluntary filing under 

Chapter 11 on or about the Petition Date. Such intention was announced publicly by PG&E Corp. and 

the Utility on a Current Report on Form 8-K on the same day. The legal obligation to “pre-announce” 

its bankruptcy filing led to a further contraction of trade terms, placing additional pressure on the 

Company and its liquidity position. (Id. at 21.) 

As detailed in the Wells Declaration, the Debtors’ liquidity position has deteriorated to the 

point that, absent significant additional financing, the Debtors will not be able to continue to operate. 

As of the Petition Date, PG&E Corp. had approximately $370 million of cash on hand, which the 

Debtors believe is sufficient for PG&E Corp. to meet its obligations during the course of the Chapter 

11 Cases. As reported in the January 14, 2018 Form 8-K filed with the Securities and Exchange 

Commission, the Utility had approximately $1.1 billion in cash on hand as of that date. However, 

starting in early January 2019, as a consequence of supplier uncertainty, media speculation, credit 

downgrades, and reactions to the SB-901 15-day notice, the Utility’s liquidity was depleted by an 

aggregate of approximately $811 million to satisfy collateral posting needs, address accelerated 

payment and pre-pay demands of energy commodity suppliers, and address requests from other 

essential suppliers for shortened payment terms. As of the filing, the Utility had cash on hand of 

approximately $240 million, net of customer deposits and cash held from counterparties of 

approximately $250 million. PG&E Corp. had approximately $370 million cash on hand as of the 

Petition Date. (See id. at 22-23.) 

In light of its deteriorating liquidity position, PG&E and its advisors explored the Company’s 

options for obtaining new financing. PG&E determined that, although it could access a significant 

amount of capital outside of chapter 11, it could only access secured indebtedness or more esoteric 

forms of alternative capital that would be relatively dilutive or expensive to temporarily extend its 

liquidity runway. (Id. at 5.) PG&E concluded that that alternative was not a solution to the 

fundamental issues facing PG&E, nor was it in the best interest of PG&E’s stakeholders, including 

wildfire claimants (who could face subordination of their claims in those circumstances), and was not 

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a feasible way to address and resolve the thousands of wildfire claims and to assure PG&E would have 

the liquidity necessary to sustain ongoing operations. (Id.) 

Additionally, during this time, PG&E was in regular communication with government 

officials, regulators and representatives, seeking a potential legislative or regulatory solutions to its 

financial and liquidity situation. (See id. at 5-6.) SB 901, which was enacted by the California 

legislature in September 2018, addressed a portion of the liabilities PG&E faced in connection with 

the 2017 Wildfires. That legislation, however, expressly excluded any similar relief for wildfires 

occurring in 2018. (Id; see also id. at 17.) Since the 2018 wildfire (the “Camp Fire”) and in view of 

PG&E’s potential liabilities relating to the Camp Fire, PG&E has been in regular contact with the 

California Public Utilities Commission (“CPUC”) and representatives of the Governor’s office, and 

has fully apprised those parties as to PG&E’s financial condition and its projected liquidity profile. 

As of the date hereof, there is no prospect of legislation being enacted on a timely basis, if at all, to 

implement the extraordinary measures necessary to stabilize PG&E’s financial condition and avoid 

the necessity of seeking relief under chapter 11. (See id. at 6.) 

B. PG&E’s Marketing Process to Obtain the DIP Facilities 

Leading up to the Petition Date, the Debtors, with the assistance of experienced financial 

advisors at Lazard Frères & Co. LLC (“Lazard”), engaged in a thorough and competitive marketing

process to obtain postpetition DIP financing. 

In consultation with their financial advisors, the Debtors sized the $5.5 billion DIP Facilities 

by assessing PG&E’s projected cash needs for the anticipated duration of the chapter 11 proceedings. 

(See Wells Decl. at 21-22; Kurtz Decl. ¶ 9.) The Debtors project capital spending to exceed cash flow 

from operations by approximately $1.6 billion in each of 2019 and 2020 largely driven by projected 

capital spending of $6.6 billion in 2019 and $6.9 billion in 2020, as well as other investing activities 

of more than $300 million forecasted for 2019 and more than $125 million for 2020. This forecasted 

level of capital spending is in-line with historical capital spending of $5.8 billion in 2017 and $6.6

billion in 2018. Due to the regulated nature of the Utility’s businesses, only a small fraction of the 

capital spending program is discretionary. Cash flow from operations is forecasted to be $5.3 billion 

in 2019 and $5.5 billion in 2020. This creates an aggregate operating cash flow deficit after capital 

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expenditures of nearly $3.2 billion over the two-year forecast period which PG&E must finance 

externally. (Wells Decl. at 21-22.) 

In addition to the combined operating deficit of $3.2 billion mentioned above, the Debtors need 

additional funding to service the DIP Financing and pay related costs. Furthermore, the Debtors’ 

advisors have projected that the Debtors will need to post additional collateral in 2019 of 

approximately $500 million to meet, among other things, environmental and other state requirements. 

The DIP Financing sizing also incorporates projected professional fees for estate-paid professionals 

to be paid during the pendency of the Chapter 11 Cases. (Id. at 22.) 

PG&E’s primary strategic considerations when marketing the financing opportunity were the 

identification of an economical and reliable source of financing that would (i) support PG&E’s need 

for a sizeable loan to provide for general working capital, (ii) provide substantial revolving credit 

capacity (including a letter of credit facility), and (iii) provide the Company with operational and 

financial flexibility and time to pursue a holistic restructuring strategy to address wildfire claim 

resolution and other critical imperatives, and (iv) to secure committed financing at the most favorable 

terms to limit the debt service cost during these Cases. (Kurtz Decl. ¶ 8.) Given the size of the required 

financing, the Company’s cash flow profile, desired flexibility to use letters of credit to secure 

significant collateral posting requirements, and to minimize the debt service cost of the overall 

financing, the Debtors sought to obtain DIP financing comprised of a $3.5 billion revolving credit 

facility and $2 billion of term loan debt. (Id. ¶ 10.) 

PG&E’s marketing process involved multiple rounds of bidding and was conducted at arm’s 

length and in good faith. With the assistance of Lazard, PG&E initially contacted eight major money 

center banks (together, the “Potential Lenders”). Each of the eight Potential Lenders signed a nondisclosure agreement (“NDA”). (Id. ¶ 11.) 

The Debtors and Lazard met with each of the Potential Lenders on January 9 and 10, 2019, in 

individual meetings and presented them with information to enable them to fully evaluate the DIP 

financing request, as well as an initial DIP financing term sheet describing the framework for the 

potential financing. (See id. ¶ 12.) Subsequently, Lazard provided the Potential Lenders with access 

to the Debtors’ virtual data room for lender diligence, and the Debtors and their advisors engaged in 

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multiple due diligence conversations with the Potential Lenders. (Id. ¶ 13.) Between January 10 and 

12, 2019, each of the eight Potential Lenders submitted initial, non-binding term sheets, and all but 

one provided a “highly confident letter” in response to the Company’s request indicating the Potential

Lender’s belief that the Company could successfully obtain $5.5 billion of DIP financing. (Id.) 

The Debtors and Lazard evaluated the initial proposals side-by-side to compare terms and 

conditions. In evaluating the proposals, the Debtors and Lazard considered each Potential Lender’s 

indicative proposed economics, ability to fully commit and underwrite the entire facility if needed, 

financing structure, perceived deal risk, market flex and proposed covenants, among other factors. 

(Id. ¶ 14.) Of the eight proposals, four offered a full 100% underwriting and four offered to provide 

only a portion of the requested DIP facilities. (Id.) 

Following this review, Lazard circulated a second round counter proposal to Potential Lenders 

on January 13, 2019, and explained that to be considered in Round 2 the Potential Lender would need 

to offer a fully 100% underwritten deal. Six of the Potential Lenders submitted revised proposals on 

Monday, January 14, 2019. The Debtors, with assistance from Lazard, then undertook similar 

quantitative and qualitative analyses to compare the updated proposals. (Id. ¶ 15.) 

Based on that analysis, the Debtors determined that the revised proposal submitted by 

JPMorgan Chase Bank, N.A. (“J.P. Morgan”) met each of their requirements and was the best 

available financing proposal. J.P. Morgan’s proposal was in line with the most favorable economic 

terms PG&E had received, and it also offered the least restrictive covenants and the largest revolver 

hold position of all proposals received. (Id. ¶ 16.) 

Accordingly, on January 15, 2019, PG&E appointed JPMorgan as the lead arranger for the DIP 

financing. Based on other strong and competitive offers, the Debtors chose Merrill Lynch, Pierce, 

Fenner & Smith Incorporated, Barclays Bank PLC, Citibank, N.A. (together with J.P. Morgan, the 

“DIP Underwriters”), to co-arrange and underwrite the DIP facilities, on the condition that all of 

these underwriters likewise agreed to the same level of revolver commitment hold position as J.P. 

Morgan and otherwise agreed to the other terms and conditions of the final J.P. Morgan proposal. (Id.

¶ 17.) Between January 15 and January 21, 2019, the Debtors, with the assistance of Lazard, counsel 

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and other advisors, negotiated the terms of the DIP Facilities’ commitment papers. The negotiations 

were conducted at arm’s length and were extensive and vigorous. (Id.) 

During the marketing process and in the weeks leading up to the Petition Date, the Debtors 

received several additional inquiries from various lending sources. The Debtors and Lazard 

investigated those inquiries on behalf of the Debtors and explored whether such institutions would be 

willing to provide financing on more competitive terms than those being negotiated with the DIP 

Underwriters. Only one alternative lender offered to provide a term loan facility on competitive terms, 

but it was unable to provide revolving credit in a similar structure and on terms similar to the DIP 

Underwriters’ proposal. In response to this specific inquiry, the Debtors and Lazard further negotiated 

with J.P. Morgan and the other DIP Underwriters and were able to further improve economic terms 

and reduce market flex. (Id. ¶ 18.) 

On January 21, 2019, the Debtors and the DIP Underwriters entered into a commitment letter 

and DIP Term Sheet for the $5.5 billion DIP Facilities. (Id. ¶ 19.) 

C. The DIP Facilities 

Summaries of the material terms of the DIP Facilities are set forth above and in the 

accompanying Kurtz declaration. (See id. ¶ 20.) The Debtors may use the DIP Facilities for working 

capital and general corporate purposes, and to pay fees, costs5

 and expenses incurred in connection 

with the administration of these chapter 11 cases. (Id. ¶ 21.) 

As a result of the marketing process described above, the Debtors have obtained DIP Financing 

on favorable terms. The DIP Facilities also provide flexibility to PG&E to use $4 billion of asset sale 

and condemnation proceeds for general corporate purposes; for any proceeds above the $4 billion 

carve-out, the Company maintains a reinvestment right of 180 days, subject to a further 180 day 

extension, thereby providing significant flexibility to PG&E to finance its business. Furthermore, the 

DIP Facilities are structured with an extension option for a third year in order to accommodate the 

Company in the event that the Chapter 11 Cases extend beyond the original December 2020 maturity 

 

5

 Such costs may include intervenor compensation awards pursuant to California Public Utilities Code §§ 1801-1812, 

which require Commission jurisdictional utilities to pay the reasonable costs of an intervenor's participation if that party 

makes a substantial contribution to the Commission's proceedings, and which may be recovered in the Debtor’s utility 

rates. 

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date of the financing. The DIP Facilities additionally provide the Company with permission to raise 

up to $4 billion of incremental, pari passu DIP financing to fund a third year of the Chapter 11 Cases

or address other financing needs that result while in Chapter 11. The DIP Facilities do not subject 

PG&E to any milestones related to a sale or plan process, leaving the Debtors with adequate time and 

flexibility to develop and implement a restructuring that is in the best interests of their estates. Further, 

the DIP Facilities contain no budget variance or other financial covenants. (Id. ¶¶ 23-24.) This 

flexibility is especially important for PG&E, as the unpredictability of its business (including 

fluctuating commodity prices and demand, driven by weather and other difficult to predict factors) 

leads to significant variability in its cash flow and working capital needs. In sum, given the DIP 

Facilities’ competitive economic terms and flexible structure, the DIP Facilities are the best financing 

available to PG&E. (See id. ¶ 30.) 

D. PG&E’s Immediate Need for Postpetition Financing 

In addition to determining the Debtors’ overall financing needs for the anticipated duration of 

the Chapter 11 Cases, PG&E and its financial advisors assessed how much liquidity PG&E would 

require in the Interim Period between the Petition Date and the final hearing on this Motion, which 

under the DIP Credit Agreement could occur as late as April 15, 2019. PG&E and its advisors 

determined, based on thirteen-week cash flow projections, that PG&E would need to draw $1.5 billion 

in financing to enable it to continue to operate prudently during this Interim Period. (See Wells Decl. 

at 23.) For that reason, the Debtors are requesting entry of the Interim Order, authorizing PG&E to 

obtain credit immediately in the amount of $1.5 billion, on the terms of the DIP Loan Documents, on 

an interim basis. 

The Debtors would experience irreparable harm if the Interim Order approving the DIP Motion 

is not entered. Access to immediate financing is essential to ensure that the Utility has sufficient 

working capital to continue operating. Absent authority to borrow under the DIP Facilities on an 

emergency basis, the Debtors will not be able to continue operations on a normal basis, which could 

potentially create public safety issues due to the inability to provide services to their customers and 

maintain safe operations, resulting in immediate and irreparable harm to the Debtors and their estates, 

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creditors (including wildfire claimants), employees, customers, and PG&E Corp.’s shareholders, and 

jeopardize their ability to successfully administer these Chapter 11 Cases. (Id. at 22.) 

The Debtors enter chapter 11 with only $860 million of aggregate cash. Approximately $250 

million of that cash is comprised of customer deposits that the Debtors believe should not be used to 

fund their operations and working capital needs. Approximately $370 million is held by PG&E Corp. 

for its own uses. As a result, the Utility, which is the operating entity of the Debtors, has access to 

only $240 million of cash as of the Petition Date, which is insufficient to meet operating expenses and 

address short-term working capital needs and to have sufficient additional liquidity to address both 

ordinary course and non-ordinary course variability in the business. (Id. at 22-23.) The Utility requires 

a minimum working capital reserve of $450 million to cover the intra month timing of energy supply 

costs. (Id. at 23.) 

The Debtors evaluated, with the assistance of their advisors, the amount of funding that they 

will require during the Interim Period. The amount was derived from a cashflow projection developed 

from an analysis of the Debtors’ receipts and disbursements (the “13 Week Budget,” attached to the 

Motion as Exhibit C). Based on that projection, the Debtors believe they need access to $1.5 billion 

of post-petition DIP financing during the course of the Interim Period to operate their businesses in an 

appropriate and prudent manner. (Id. at 23.) 

VI. BASIS FOR RELIEF REQUESTED 

A. The Court Should Approve the DIP Facilities Under Section 364(c). 

PG&E requests authorization under section 364(c) of the Bankruptcy Code to grant the DIP 

Lenders three types of protections: (a) superpriority administrative claims pursuant to section 

364(c)(1) (See DIP Credit Agreement § 2.19(a)); (b) senior liens on PG&E’s unencumbered assets 

pursuant to section 364(c)(2) (id. § 2.19(b)); and (c) junior liens on PG&Es assets that are subject to a 

lien pursuant to section 364(c)(3) (id. § 2.19(c)). PG&E has satisfied the requirements to obtain credit 

on these terms. 

Under section 364(c), a debtor may grant superpriority administrative claims and incur secured 

debt if the court determines that the debtor was “unable to obtain unsecured credit allowable under 

section 503(b)(1) . . . as an administrative expense”. 11 U.S.C. § 364(c). Courts evaluating requests 

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for financing under section 364(c) consider whether certain factors are met, including that: (1) the 

proposed financing is an exercise of the debtor’s sound and reasonable business judgment; (2) the 

financing agreement was negotiated in good faith and at arm’s length; (3) no alternative financing is 

available on any other basis; (4) the terms of the transaction are fair, reasonable, and adequate, given 

the circumstances of the borrower and the proposed lender; (5) the financing is necessary, essential, 

and appropriate for the continued operation of the Debtors’ businesses and the preservation of their 

estates; and (6) the financing is in the best interests of the estate and its creditors. See In re Gardens 

Reg’l Hosp., No. 2:16-BK-17463-ER, 2017 WL 7101146, at *4 (Bankr. C.D. Cal. July 28, 2017) 

(approving postpetition financing under § 364(c) based on these factors); In re Sterling Mining Co., 

No. 09-20178-TLM, 2009 WL 2514167, at *3 (Bankr. D. Idaho Aug. 14, 2009); see also In re 

Farmland Indus., Inc., 294 B.R. 855, 879-81 (Bankr. W.D. Mo. 2003) (discussing factors applied by 

bankruptcy courts across jurisdictions). Each of these factors is satisfied here. 

1. The DIP Facilities Reflect PG&E’s Sound Business Judgment. 

In evaluating proposed DIP financing under Section 364(c), courts generally defer to the 

business judgment of the debtor. See In re Republic Airways Holdings Inc., No. 16-10429(SHL), 2016 

WL 2616717, at *10–11 (Bankr. S.D.N.Y. May 4, 2016); In re Ames Dep’t Stores, 115 B.R. 34, 40 

(Bankr. S.D.N.Y. 1990). Courts presume that debtors make financing decisions “on an informed basis, 

in good faith, and in the honest belief that the action taken was in the best interests of the company.” 

In re Los Angeles Dodgers LLC, 457 B.R. 308, 313 (Bankr. D. Del. 2011); see also In re Simasko 

Prod. Co., 47 B.R. 444, 449 (D. Colo. 1985) (“The discretion to act with regard to business planning 

activities is at the heart of the debtor’s power.”) Courts will not “second-guess a business decision, 

so long as corporate management exercised a minimum level of care in arriving of the decision”. In 

re Los Angeles Dodgers LLC, 457 B.R. at 313; see also In re Simasko Prod. Co., 47 B.R. at 449 

(“business judgments should be left to the board room and not to this Court”). 

Here, PG&E has exercised the utmost level of care in selecting and entering into the DIP 

Facilities. As explained in the Wells Declaration and the Kurtz Declaration, the PG&E Board and 

management engaged in extensive deliberations regarding PG&E’s liquidity and financing options, in 

consultation with experienced legal and financial advisors. (See Wells Decl. at 4; Kurtz Decl. ¶ 9.) 

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As described in detail above and in the Kurtz Declaration, PG&E carried out a robust and competitive 

marketing process, reviewing competing proposals and selecting the option offering the best terms 

following multiple rounds of negotiations. Accordingly, the Debtors submit that the decision to enter

into the DIP Facilities are the product of their sound business judgment. 

2. The DIP Facilities Were Negotiated in Good Faith and at Arm’s Length, Their 

Terms Are Fair, Reasonable and Adequate, and PG&E Could Not Obtain 

Credit Available on More Favorable Terms. 

A debtor is not required to seek alternative financing from every possible lender before it may 

grant administrative expense claims or incur secured debt. See In re Snowshoe Co., 789 F.2d 1085, 

1088 (4th Cir. 1986) (more favorable credit unavailable where debtor contacted lenders in the 

“immediate geographic area” and they would not extend unsecured credit); see also In re Reading 

Tube Indus., 72 B.R. 329, 332 (Bankr. E.D. Pa. 1987). Rather, the debtor need only demonstrate that 

it made a “reasonable effort” to obtain unsecured credit from other lenders. In re Ames Dep’t Stores, 

Inc., 115 B.R. 34, 40 (Bankr. S.D.N.Y. 1990) (citing cases); In re Capitol Station 65, LLC, No. 17-

23627-B-11, 2018 WL 333863, at *12 (Bankr. E.D. Cal. Jan. 8, 2018). 

PG&E engaged in a competitive and thorough marketing process to obtain the most favorable 

postpetition financing available. PG&E’s marketing process, and the negotiations of the terms of the 

DIP Facilities, were carried out in good faith and at arm’s length through sophisticated and experienced 

legal and financial advisors. (See Kurtz Decl. ¶¶ 7-19.) Based on an evaluation of all reasonably 

available options, the DIP Facilities represent the best financing available to the Debtors. (Id. ¶ 30.) 

As noted in the Wells Declaration, given PG&E’s financial circumstances and credit profile, 

financing was not available except for secured indebtedness or alternative forms of capital that would

have been be unduly expensive or dilutive. (See Wells Decl. at 19.) Moreover, PG&E was unable to 

obtain funding through a legislative, regulatory, executive or other governmental solution. (Wells 

Decl. at 5-6.) 

Finally, as described more fully above, PG&E was unable to obtain financing without agreeing 

to provide the lenders with certain terms enumerated in the Guidelines. PG&E submits that approving 

such terms is appropriate under the circumstances because (a) the DIP Lenders were unwilling to 

extend $5.5 billion in credit without such terms; and (b) the terms of the DIP Facilities are otherwise 

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favorable to the Debtors and their estates. (See Kurtz Decl. ¶¶ 21-23.) Notably, the DIP Facilities do 

not subject PG&E to any milestones related to a sale or plan process, and it contains no financial 

covenants. (See id. ¶ 23.) Moreover, provisions similar to the enumerated terms at issue here are 

frequently approved in this district, see, e.g., Blue Earth, Inc. et al., Case No. 16-30296 (Bankr. N.D. 

Cal. Apr. 29, 2016) [Docket No. 116]; In re Newzoom, Inc., Case No. 15-31141 (Bankr. N.D. Cal. 

Oct. 15, 2015) [Docket No. 153]; In re Rdio, Inc., Case No. 15-31430 (Bankr. N.D. Cal. Dec. 10, 

2015) [Docket No. 122], and in large chapter 11 cases elsewhere, see, e.g., In re Toys ‘‘R’’ Us, Inc.,

Case No. 17-34665 (Bankr. E.D. Va. Sep. 20, 2017) [Docket No. 98]. 

For the foregoing reasons, the Debtors submit that the DIP Facilities were negotiated at arm’s 

length and in good faith, that its terms are fair, reasonable and adequate, and that the DIP Facilities 

represent the best financing available to PG&E under the circumstances. 

3. The DIP Facilities are Necessary, Essential and Appropriate for the 

Continued Operation of PG&E’s Businesses and the Preservation of its 

Estates and are in the Best Interest of the Estate and its Creditors. 

The DIP Facilities are necessary for the continued operation of the Debtors’ businesses and the 

preservation of their estates. As discussed above and in the Kurtz Declaration, the DIP Facilities were 

sized based upon the Debtors’ projected cash flow and liquidity needs for the anticipated duration of 

these chapter 11 proceedings. (See Kurtz Decl. ¶ 9.) Without access to this financing, the Debtors 

would lack sufficient liquidity to continue operating, putting at risk not only the assets of the Debtors’ 

estates but the Debtors’ ability to provide electricity and natural gas to their millions of customers. 

(Wells Decl. at 3; see also Kurtz Decl. ¶ 28.) Accordingly, the DIP Facilities preserve the Debtors’ 

operations and is in the best interests of the estate and its creditors. 

B. The Proposed Interim Order Should Be Granted 

1. The Court Should Conduct a Preliminary Expedited Hearing 

Bankruptcy Rule 4001(c) provides that a final hearing on a motion to obtain financing may not 

be commenced earlier than 14 days after the service of such motion. Upon request, however, the Court 

is authorized to conduct a preliminary expedited hearing on a motion to access the DIP Facilities to 

the extent necessary to avoid immediate and irreparable harm to a debtor’s estate pending a final 

hearing. Pursuant to Bankruptcy Rule 4001(c), PG&E requests that the Court conduct an expedited 

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preliminary hearing on the Motion and (i) authorize the Debtors to obtain DIP Financing in order to 

(a) maintain and finance their ongoing operations and (b) avoid immediate and irreparable harm and 

prejudice to the Debtors’ estates and all parties in interest, and (ii) schedule a Final Hearing on the 

relief requested herein. 

Absent authorization from the Court to access the DIP Loans on an interim 

basis pending a Final Hearing, the Debtors and their creditors will be immediately and irreparably 

harmed. As set forth above, the Debtors’ ability to access the DIP Facilities on the terms described 

herein is critical to their ability to operate their business. Accordingly, the Interim Order should be 

granted. 

2. The Debtors Require Immediate Access to the DIP Facilities 

The Court may grant interim relief in respect of a motion filed pursuant to section 363(c) or 

364 of the Bankruptcy Code where, as here, interim relief is “necessary to avoid immediate and 

irreparable harm to the estate pending a final hearing.” Fed. R. Bankr. P. 4001(b)(2), (c)(2). In 

examining requests for interim relief under this rule, courts generally apply the same business 

judgment standard applicable to other business decisions. See, e.g., In re Seriosa, Case No. 2:16-BK14276-RK, 2016 WL 3478953, at *1 (Bankr. C.D. Cal. June 20, 2016). 

The Debtors and their estates will suffer immediate and irreparable harm if the interim relief 

requested herein, including authorizing the Debtors to access $1.5 billion under the DIP Facilities, is 

not granted promptly after the Petition Date. As set forth in the Wells Declaration, and as further 

detailed above, the Debtors have an immediate need for access to financing to continue the operation 

of their business, meet payroll, procure energy supply and other goods and services from vendors and 

suppliers and otherwise satisfy their working capital and operational needs, all of which is required to 

preserve and maintain the Debtors’ value for the benefit of all parties in interest. (See Wells Decl. at 

22-24.) 

The importance of a debtor’s ability to access debtor-in-possession financing facilities to 

prevent immediate and irreparable harm to its estate has been repeatedly recognized in this and other 

circuits in similar circumstances. See, e.g., In re Fleetwood Enterprises, Inc., et al., Case No. 09-

14254-MJ (Bankr. C.D. Cal. Mar. 31, 2009) [Docket No. 183] (approving postpetition financing and 

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modifying the automatic stay where, “[w]ithout the DIP Financing, the Debtors’ operations would be 

discontinued or severely disrupted, and the Debtors would be unable to pay operating expenses, 

including expenses for necessary inventory and payroll, and to operate their businesses in an orderly 

manner, thereby severely impairing their ability to reorganize”); In re Gardens Reg’l Hosp., Case No. 

2:16-bk-17463-ER, 2017 WL 7101146, at *12 (Bankr. C.D. Cal. July 28, 2017); In re Breitburn 

Energy Partners LP, et al., Case No. 16-11390 (SMB) (Bankr. S.D.N.Y. May 23, 2016) [Docket No. 

73] (order approving postpetition financing on an interim basis); In re SunEdison, Inc., Case No. 16-

10992 (SMB) (Bankr. S.D.N.Y. Apr. 26, 2016) [Docket No. 87] (same); In re The Great Atl. & Pac. 

Tea Co., Inc., Case No. 15-23007 (RDD) (Bankr. S.D.N.Y. July 21, 2015) [Docket No. 88] (order 

approving postpetition financing on an interim basis); In re Eastman Kodak Co., et al., Case No. 12-

10202 (MEW) (Bankr. S.D.N.Y. Jan. 20, 2012) [Docket No. 54] (same). 

As set forth in the Wells Declaration, access to the DIP Facilities during the Interim Period 

would provide the Debtors sufficient liquidity to stabilize their operations and fund the administration 

of these Chapter 11 Cases. Specifically, the DIP Facility will allow the Debtors to: (a) acquire timely 

energy supply that is essential to the Debtors’ ability to provide uninterrupted services to its customers; 

(b) provide the liquidity necessary to stabilize supply with other non-energy vendors including those 

performing critical safety, vegetation management, and wildfire restoration services; (c) fund 

approximately $260 million of payroll obligations coming due in the first month of the Chapter 11 

Cases; (d) fund other essential payments made under first day orders; (e) fund approximately $400 

million of collateral that the state has requested to backstop the Debtors’ workers’ compensation plans; 

(f) fund the administrative costs of these Chapter 11 Cases; and (g) permit the Debtors to maintain a 

working capital reserve of $450 million to cover the intra month timing of energy supply costs. The 

interim DIP funding amount would also provide a reasonable liquidity buffer to the Debtors in the 

event they underperform their projections, or in case unexpected fluctuations occur in energy markets 

causing a disruption in supply or requirements to post additional collateral, which could result in the 

need to access several hundred million dollars within a day’s time. Furthermore, the liquidity buffer

provides the Utility with the necessary resources to respond to winter storms or other emergency 

circumstances. (See Wells Decl. at 23.) 

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Moreover, ensuring that the Debtors continue to operate pending a final hearing on the DIP 

Motion is not merely a commercial objective. Unlike many other chapter 11 cases, here, it is especially 

crucial that the Debtors obtain financing to continue their operations because the Debtors provide 

energy to nearly 16 million people across 700,000 square miles in Northern and Central California. 

Given the nature of the Debtors’ businesses, any interruption of the Debtors’ ability to pay vendors 

and operate their businesses could potentially (i) cause environmental hazards or pose significant risk 

to the environment, (ii) pose a threat to health and public safety, or (iii) compromise the ability to 

provide power to the California electrical grid. (See Wells Decl. at 24.) 

Accordingly, for the reasons set forth above, entry of the Interim Order is necessary to avoid 

immediate and irreparable harm to the Debtors’ estates and is consistent with, and warranted under, 

Bankruptcy Rules 4001(b)(2) and (c)(2) as well as Bankruptcy Rule 6003(b). 

C. The DIP Lenders Should Be Deemed Good Faith Lenders under Section 364(e) 

Section 364(e) of the Bankruptcy Code protects a good faith lender’s right to collect on loans 

extended to a debtor, and its right in any lien securing those loans, even if the authority of the debtor 

to obtain such loans or grant such liens is later reversed or modified on appeal. Section 364(e) provides 

that: 

The reversal or modification on appeal of an authorization under this 

section [364 of the Bankruptcy Code] to obtain credit or incur debt, or 

of a grant under this section of a priority or a lien, does not affect the 

validity of any debt so incurred, or any priority or lien so granted, to an 

entity that extended such credit in good faith, whether or not such entity 

knew of the pendency of the appeal, unless such authorization and the 

incurring of such debt, or the granting of such priority or lien, were 

stayed pending appeal. 

11 U.S.C. § 364(e). 

As explained in detail herein and in the Kurtz Declaration, the DIP Facilities are the result of 

PG&E’s reasonable and informed determination that the DIP Lenders offered the most favorable terms 

pursuant to which PG&E could obtain postpetition financing. All negotiations regarding the DIP 

Facilities were conducted in good faith and on an arm’s length basis. The terms and conditions of the

DIP Facilities are fair and reasonable, and the proceeds of the DIP Facilities will be used only for 

purposes that are permissible under the Bankruptcy Code. Further, no consideration is being provided 

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to any party to the DIP Facilities other than as described herein or set forth in the Fee Letters which 

the Debtors have provided to the Court and the Office of the United States Trustee, and have sought, 

on the date hereof, to file under seal. Accordingly, the Court should find that the DIP Lenders are 

“good faith” lenders within the meaning of section 364(e) of the Bankruptcy Code, and are entitled to 

all of the protections afforded by that section. 

D. The Scope of The Carve-out Is Appropriate 

The DIP Liens are subject to the Carve-Out. Without the Carve-Out, the Debtors and other 

parties-in-interest may be deprived of certain rights and powers because the services for which 

professionals may be paid in these Chapter 11 Cases would be restricted. See In re Ames Dep’t Stores, 

Inc., 115 B.R. 34, 38 (Bankr. S.D.N.Y. 1990) (observing that courts insist on carve-outs for 

professionals representing parties in interest because “[a]bsent such protection, the collective rights 

and expectations of all parties-in-interest are sorely prejudiced”). The Carve-Out does not directly or 

indirectly deprive the Debtors’ estates or other parties-in-interest of possible rights and powers. 

Additionally, the Carve-Out ensures that assets will be available for the payment of fees of the Clerk

of Court or the Office of the United States Trustee for the Northern District of California and 

professional fees of the Debtors and any statutory Committee appointed in these Chapter 11 Cases. 

E. The Automatic Stay Should Be Modified on a Limited Basis 

The relief requested herein contemplates a modification of the automatic 

stay to permit the Debtors to grant the DIP Liens and, subject to a seven day notice period, permit the 

DIP Agents to enforce its remedies under the DIP Credit Agreement as against the Debtors. Stay 

modifications of this kind are ordinary and standard features for DIP financing, and in the Debtors’ 

business judgment, are reasonable and fair under the present circumstances. See, e.g., In re Gardens 

Reg’l Hosp., No. 2:16-BK-17463-ER, 2017 WL 7101146 (Bankr. C.D. Cal. Jul. 28, 2016); In re 

Fleetwood Enterprises, Inc., et al., Case No. 09-14254-MJ (Bankr. C.D. Cal. Apr. 1, 2009) [Docket 

No. 183]; In re SunEdison, Inc., Case No. 16-10992 (SMB) (Bankr. S.D.N.Y. Apr. 26, 2016) [Docket 

No. 87]; In re Aeropostale, Inc., Case No. 16-11275 (SHL) (Bankr. S.D.N.Y. May 06, 2016) [Docket 

No. 99]. 

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F. Bankruptcy Rule 4001(a)(3) Should Be Waived 

The Debtors request a waiver of the stay of the effectiveness of the order approving this Motion 

under Bankruptcy Rule 4001(a)(3). Bankruptcy Rule 4001(a)(3) provides, “[a]n order granting a 

motion for relief from an automatic stay made in accordance with Rule 4001(a)(1) is stayed until the 

expiration of fourteen days after entry of the order, unless the court orders otherwise.” As explained

herein, access to the DIP Facilities is essential to prevent irreparable damage to the Debtors’ estates. 

Accordingly, ample cause exists to justify the waiver of the fourteen-day stay imposed by Bankruptcy 

Rule 4001(a)(3), to the extent such stay applies. 

G. Bankruptcy Rule 6003 Has Been Satisfied 

Bankruptcy Rule 6003(b) states that, to the extent relief is necessary to avoid immediate and 

irreparable harm, a bankruptcy court may issue an order granting “a motion to use, sell, lease, or 

otherwise incur an obligation regarding property of the estate, including a motion to pay all or part of 

a claim that arose before the filing of the petition” before 21 days after filing of the petition. The 

Debtors’ estates would suffer immediate and irreparable harm if the relief sought herein is not 

promptly granted. Accordingly, the Debtors submit that the relief requested herein is necessary to 

avoid immediate and irreparable harm and, therefore, Bankruptcy Rule 6003 is satisfied. 

VII. REQUEST FOR BANKRUPTCY RULE 6004(a) AND (h) WAIVERS

To implement the foregoing successfully, the Debtors seek a waiver of the notice requirements 

under Bankruptcy Rule 6004(a) and the 14-day stay of an order authorizing the use, sale, or lease of 

property under Bankruptcy Rule 6004(h). As explained above and in the Wells Declaration, the relief 

requested herein is necessary to avoid immediate and irreparable harm to the Debtor’s estates. 

Accordingly, ample cause exists to justify the waiver of the notice requirements under Bankruptcy 

Rule 6004(a) and the 14-day stay imposed by Bankruptcy Rule 6004(h), to the extent such notice 

requirements and such stay apply. 

VIII. RESERVATION OF RIGHTS 

Nothing contained herein is intended or shall be construed as (i) an admission as to the validity 

of any claim or lien against the Debtors, (ii) a waiver of the Debtors’ or any appropriate party-ininterest’s rights to dispute the amount of, basis for, or validity of any claim against the Debtors, (iii) a 

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waiver of any claims or causes of action which may exist against any creditor or interest holder, or 

(iv) an approval, assumption, adoption, or rejection of any agreement, contract, lease, program, or 

policy between the Debtors and any third party under section 365 of the Bankruptcy Code. Likewise, 

if the Court grants the relief sought herein, any payment made pursuant to the Court’s order is not 

intended to be and should not be construed as an admission to the validity of any claim or a waiver of

the Debtors’ rights to dispute such claim subsequently. 

IX. NOTICE 

Notice of this Motion will be provided to (i) the Office of the United States Trustee for Region 

17 (Attn: James L. Snyder, Esq. and Timothy Laffredi, Esq.); (ii) the Debtors’ fifty (50) largest 

unsecured creditors on a consolidated basis; (iii) the Securities and Exchange Commission; (iv) the 

Internal Revenue Service; (v) the Office of the California Attorney General; (vi) the California Public 

Utilities Commission; (vii) the Nuclear Regulatory Commission; (viii) the Federal Energy Regulatory 

Commission; (ix) the Office of the United States Attorney for the Northern District of California; (x)

counsel for the agent under the Debtors’ proposed debtor in possession financing facilities; and 

(xi) those persons who have formally appeared in these Chapter 11 Cases and requested service 

pursuant to Bankruptcy Rule 2002. Based on the urgency of the circumstances surrounding this 

Motion and the nature of the relief requested herein, the Debtors respectfully submit that no further 

notice is required. 

No previous request for the relief sought herein has been made by the Debtors to this or any 

other court. 

WHEREFORE the Debtors respectfully request entry of the Interim Order granting the relief 

requested herein and such other and further relief as the Court may deem just and appropriate. 

 

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Dated: January 29, 2019 CRAVATH, SWAINE & MOORE LLP

WEIL, GOTSHAL & MANGES LLP 

KELLER & BENVENUTTI LLP 

By: /s/ Tobias S. Keller

Tobias S. Keller 

Proposed Attorneys for Debtors and Debtors in Possession 

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