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BAKER 

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HOSTETLER LLP

ATTORNEYS AT LAW SAN FRANCISCO

 

Robert A. Julian (SBN 99469) 

Cecily A. Dumas (SBN 111449) 

BAKER & HOSTETLER LLP 

1160 Battery Street, Suite 100 

San Francisco, CA 94111 

Telephone: 628.208.6434 

Facsimile: 310.820.8859 

Email: rjulian@bakerlaw.com 

Email: cdumas@bakerlaw.com 

Eric E. Sagerman (SBN 155496) 

Lauren T. Attard (SBN 320898) 

BAKER & HOSTETLER LLP 

11601 Wilshire Blvd., Suite 1400 

Los Angeles, CA 90025-0509 

Telephone: 310.442.8875 

Facsimile: 310.820.8859 

Email: esagerman@bakerlaw.com 

Email: lattard@bakerlaw.com 

Counsel for Official 

Committee of Tort Claimants 

UNITED STATES BANKRUPTCY COURT 

NORTHERN DISTRICT OF CALIFORNIA 

SAN FRANCISCO DIVISION 

In re:

PG&E CORPORATION 

-andPACIFIC GAS AND ELECTRIC 

COMPANY, 

 Debtors. 

□ Affects PG&E Corporation 

□ Affects Pacific Gas and Electric Company 

■ Affects both Debtors 

*All papers shall be filed in the Lead Case, 

No. 19-30088 (DM) 

Bankruptcy Case 

No. 19-30088 (DM) 

Chapter 11 

(Lead Case) 

(Jointly Administered) 

SUPPLEMENT TO THE 

APPLICATIONS OF THE OFFICIAL 

COMMITTEE OF TORT CLAIMANTS 

TO RETAIN AND EMPLOY LINCOLN 

PARTNERS ADVISORS LLC AND 

DEVELOPMENT SPECIALISTS, INC. 

AS ITS FINANCIAL ADVISORS 

Date: May 9, 2019 

Time: 9:30 a.m. (Pacific Time) 

Place: United States Bankruptcy Court 

 Courtroom 17, 16th Floor 

 San Francisco, CA 94102 

Case: 19-30088 Doc# 1837 Filed: 05/03/19 Entered: 05/03/19 16:11:34 Page 1 of

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The Official Committee of Tort Claimants (hereafter, the “TCC”), in the above-captioned 

chapter 11 cases (“Chapter 11 Cases”) of PG&E Corporation and Pacific Gas and Electric 

Company (collectively, the “Debtors”), by and through its undersigned counsel, hereby submits 

this supplement (the “Supplement”) to the (i) Application of the Official Committee of Tort 

Claimants Pursuant to 11 U.S.C. § 1103 and Fed. R. Bankr. P. 2014 and 5002 to Retain and Employ 

Lincoln Partners Advisors LLC, as a Financial Advisor Effective as of March 1, 2019 (the “Lincoln 

Application”) [Doc. No. 1134], and (ii) Application of the Official Committee of Tort Claimants 

Pursuant to 11 U.S.C. § 1103 and Fed. R. Bankr. P. 2014 and 5002 to Retain and Employ 

Development Specialists, Inc., as a Financial Advisor Effective as of March 20, 2019 (the “DSI 

Application” and together with the Lincoln Application, the “Applications”) [Doc. No. 1461], to 

address the Court’s preliminary questions regarding the Applications as stated in the Issues to be 

Addressed at the April 24 Hearing on Retention Applications (the “Statement of Issues”) [Doc. 

No. 1587]. In support of the Supplement, the TCC respectfully states as follows: 

PRELIMINARY STATEMENT 

1. These Chapter 11 Cases involve one of the largest and most complicated 

restructurings to date. The TCC represents the largest group of stakeholders in the Chapter 11 

Cases and is comprised mainly of individual tort victims. Unlike many other participants in these 

Chapter 11 Cases, the TCC’s members are not employees or representatives of financial institutions 

or corporations with vast corporate and financial resources. Given the critical importance of 

financial advisory support for the TCC specifically, the TCC spent substantial time and resources 

identifying and interviewing financial advisors based on its anticipated needs. 

2. Following a thorough selection process, the TCC hired two separate financial 

advisors, Lincoln Partners Advisors, LLC (“Lincoln”) and Development Specialists, Inc. (“DSI”), 

to fulfill two separate roles in the Chapter 11 Cases. Lincoln’s role would be to provide all financial 

advisory services that the TCC would need during the Chapter 11 Cases, except for those related 

to tort claims. Lincoln’s services would include, and as outlined more completely below, assisting 

the TCC in evaluating the Debtors’ financial affairs, potential transactions and reorganization plan, 

and, if necessary, serving as the TCC’s expert witness on enterprise value in connection with plan 

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confirmation. DSI’s distinct role would be limited to providing financial advisory services on 

claims-related matters, such as assisting the TCC with the administration, valuation and estimation 

of tort claims. 

3. The TCC respectfully submits that the retention of both Lincoln and DSI is 

necessary for the TCC to carry out its statutory duties in an efficient and cost-effective manner. 

Neither the TCC, nor the advisors believe that one of the selected advisors can perform both sets 

of services each has been hired to provide as efficiently as the other. Moreover, no other financial 

advisory firms interviewed by the TCC that were, in the TCC’s view, eligible to serve as the TCC’s 

disinterested and unconflicted professionals, possessed both sets of skills critical to representing 

the tort claimants’ interests. The TCC further submits that sharing financial advisors with the 

Official Committee of Unsecured Creditors (the “UCC”) could be problematic for several reasons, 

including the potential for harm to the TCC’s and UCC’s respective constituencies when the TCC’s 

and UCC’s positions diverge and issues concerning privilege and confidentiality may arise. 

4. To ensure cooperation between Lincoln and DSI and avoid the duplication of 

services for the TCC, the TCC, together with Lincoln and DSI, have structured the scope of services 

the advisors will provide so that the scope of each will be distinct. Therefore, the TCC respectfully 

requests that the Court grant the Applications under this scope. 

BACKGROUND

5. On January 29, 2019, the Debtors commenced these Chapter 11 Cases by filing 

voluntary petitions for relief under chapter 11 of title 11 of the United States Code (the 

“Bankruptcy Code”). 

6. On February 15, 2019, the Office of the United States Trustee (“U.S. Trustee”) filed 

an Appointment of the Official Committee of Tort Claimants [Doc. No. 453]. Following the 

resignation of Richard Heffern from the original committee and the addition of Tommy Wehe, on 

February 21, 2019, the U.S. Trustee filed the Amended Appointment of the Official Committee of 

Tort Claimants [Doc. No. 530]. The members of the TCC are: (i) GER Hospitality, LLC, in its 

capacity as an individual claimant; (ii) Kirk Trostle; (iii) Tommy Wehe; (iv) Angelo Loo; (v) Karen 

K. Gowins; (vi) Agajanian, Inc.; (vii) Susan Slocum; (viii) Samuel Maxwell; (ix) Karen M. 

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Lockhart; (x) Wagner Family Wines-Caymus Vineyards; and (xi) Gregory Wilson. The TCC 

conducted a meeting on February 15, 2019, at which all members were present, and appointed 

Karen M. Lockhart as Chairperson. 

7. On March 30, 2019, the TCC filed the Lincoln Application for approval to retain 

Lincoln to provide all financial advisory services that the TCC would need during the Chapter 11 

Cases, except for those related to tort claims. Lincoln’s proposed services would include: (i) 

reviewing and analyzing the Debtors’ operations and businesses and financial projections, financial 

condition, business plan strategy, operating forecasts, cash flow projections, and budgets; (ii) 

analyzing the proposed sale(s) of core/non-core assets of the Debtors, the terms thereof and options 

and issues relating thereto, including strategic alternatives available to the Debtors; and (iii) 

assisting the TCC in developing, evaluating, structuring and negotiating the terms and conditions 

of a restructuring, plan of reorganization, disclosure statement, or sale transaction(s), including the 

value of the securities, if any, that may be issued to the TCC under any such restructuring, plan of 

reorganization, or sale transaction.1 

8. On April 15, 2019, the TCC filed the DSI Application for approval to retain DSI to 

perform financial advisory services related to tort claims, which would include among the following 

services: (i) advising the TCC and its counsel regarding the tort claims process, filing and 

processing of tort claims and estimation of tort claims; and (ii) claims management including 

establishing procedures for claims processing and coordination with claimants.2

9. On April 22, 2019, the Court issued its Statement of Issues requesting further 

information regarding the TCC’s retention of two financial advisors in light of the UCC’s pending 

applications to retain Centerview Partners LLC and FTI Consulting, Inc.3 

10. The Court conducted hearings on April 24, 2019, on several retention matters, 

including the retention applications of the UCC, which the Court also addressed in the Statement 

of Issues. During those hearings, the Court authorized the TCC to submit supplemental papers to 

respond to the Court’s Statement of Issues concerning the Applications. The Court also raised the 

 

1 See Lincoln Application, Ex. B. 

2 See DSI Application, Ex. B. 

3

 Statement of Issues at 4. 

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issue of whether it could approve provisions granting indemnity for negligence, like those requested 

in the Lincoln Application. Lincoln has agreed to carve out negligence from the indemnification 

provisions sought in the Lincoln Application. 

11. The TCC received no objections to either the Lincoln Application or DSI 

Application. 

THE TCC’S SELECTION OF LINCOLN AND DSI 

12. The TCC and its counsel identified more than fifteen (15) financial advisors for 

initial discussion of relevant qualifications and connections to these proceedings. The TCC 

ultimately interviewed seven (7) such advisors. In its selection process, the TCC focused primarily 

on two sets of critical skills based on its anticipated financial advisory needs. The first set relates 

to those typically requested by chapter 11 committees, including industry expertise, enterprise value 

evaluation, financial modeling, review of the Debtors’ operations and cash flow, potential 

transaction review, and the like (collectively, “Asset Evaluation”). The second set of skills relates 

to the administration, analysis and estimation of tort claims on a scale unlike other cases (“Claims 

Evaluation”). While the TCC did interview many of the largest financial firms with both sets of 

skills “in-house,” each of those larger firms, in the TCC’s view, had connections with the Debtors 

or parties in interest that rendered them ineligible to serve as the TCC’s disinterested or 

unconflicted financial advisor (or, at least, made the retention less desirable). 

13. The TCC ultimately selected two sets of advisors that it believed could work 

cooperatively to accomplish their separate scopes of services as efficiently as one and with the 

requisite skills to assist the TCC in navigating the financial complexities of the Chapter 11 Cases. 

The TCC selected Lincoln to provide Asset Evaluation services and DSI for Claims Evaluation 

services. Given the complex nature of the assets and claims at issue here, neither the advisors, nor 

the TCC, believe that one of the selected advisors can perform both sets of services. To avoid the 

duplication of services and facilitate cooperation between Lincoln and DSI, the TCC limited the 

scope of services each was to provide in their respective engagement letters with the TCC.4

 

4 See Lincoln Application, Ex. B; DSI Application, Ex. B. 

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14. To ensure that Lincoln and DSI do not perform duplicative services for the TCC and 

to ensure cooperation between them, Lincoln and DSI have further revised their scope of 

employment to cleanly divide their respective services between Asset Evaluation and Claims 

Evaluation (the “Revised Scope”).5

SUPPLEMENT TO THE APPLICATIONS

A. The TCC Cannot Share the UCC’s Financial Advisors 

15. Although the TCC and the UCC share the common goal of a successful and costeffective reorganization, the TCC believes reliance on the UCC’s financial advisors or a common 

financial advisor would be problematic for several reasons. While the TCC’s and UCC’s respective 

positions may align on several issues, if other large cases involving multiple committees are to be 

a guide, the TCC and UCC may not agree on other issues that are critical to the TCC’s claims. See, 

e.g., Official Comm. of Equity Sec. Holders v. Adelphia Communs. Corp. (In re Adelphia Communs. 

Corp.), 371 B.R. 660, 663 (S.D.N.Y. 2007) (affirming bankruptcy court’s confirmation of the 

debtor’s plan that was supported by the debtor and creditors’ committee and contested by the equity 

committee). 

16. Instances will arise in which the TCC’s and UCC’s positions will diverge. Thus, the 

TCC and UCC could not utilize the same financial advisor. The TCC is concerned that such a 

divergence could confer an unfair advantage to one constituency over the other or result in harm to 

both. Indeed, the TCC and UCC, as well as their advisors, owe independent fiduciary duties to their 

respective constituents, including the duties of honesty and loyalty. See Vasconi & Assocs., Inc. v. 

Credit Manager Ass’n of California, No. 94-52142, 1997 WL 383170, at *3 (N.D. Cal. July 1, 

1997) (“As fiduciaries, counsel and committee members have obligations of fidelity, undivided 

loyalty and impartial service in the interest of the creditors they represent.”); In re Johns-Manville 

Corp., 26 B.R. 919, 925-26 (Bankr. S.D.N.Y. 1983) (stating that members of the official committee 

 

5

 Under the Revised Scope, DSI’s services will no longer include the following categories of services identified in 

DSI’s engagement letter with the TCC: monitoring the Debtors’ liquidity, including evaluation of critical vendor 

payments and other key payments; reviewing the Debtors’ statements of financial affairs, schedules of assets and 

liabilities and related documents, and reporting to the TCC as appropriate; and assisting counsel with advising the TCC 

on tax issues relating to the Debtors. Lincoln will perform these services instead. See Declaration of Karen M. Lockhart 

in Support of the Supplement ¶8; Ex. A.

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of asbestos claimants must be honest, loyal, trustworthy and act with undivided loyalty and 

allegiance to the asbestos claimants). While the interests of the TCC’s and UCC’s constituencies 

overlap in part, they do not overlap in their entirety. To the extent their interests and therefore 

obligations diverge, the advisors’ loyalties would be split. 

17. The TCC is also concerned about other practical implications to the extent the TCC 

and UCC share an advisor and diverge with respect to a major position. In that event, it is unclear 

how the committees would manage issues concerning privilege and confidentiality that are likely 

to arise. The TCC expects it will rely on the advice of its financial advisor on any major issue – 

whether that issue relates to Asset Evaluation or Claims Evaluation. To the extent conflicting 

financial analysis is required, this could result in the waiver of those protections, notwithstanding 

any joint defense agreement the two committees may negotiate. It is unclear on which position the 

advisor could testify or whether the financial advisor could testify in support of either position. 

18. The TCC has discussed the concept of sharing advisors with the UCC. Neither 

committee would support sharing financial advisors, in part due to the potential for conflicts of 

interest. 

B. The TCC Requires the Services of both Lincoln and DSI 

19. Due to the complexity and nature of these Chapter 11 Cases, the TCC believes it 

necessary to obtain financial advisory services to assist it with both Asset Evaluation and Claims 

Evaluation. To that end, the TCC interviewed several prospective financial advisors that could 

provide these essential services. After a thorough selection process, the TCC hired Lincoln and DSI 

because each possessed the requisite skill set and the ability to provide their respective services in 

a cost-effective and efficient manner. 

20. While the TCC seeks the Court’s approval to retain two advisors, the TCC’s 

intention is to divide one financial advisory role into two distinct parts. The TCC has already used 

the services of both Lincoln and DSI and believes it will require their services throughout the 

Chapter 11 Cases. With respect to Lincoln, the TCC has sought and will continue to seek Lincoln’s 

advice with respect to Asset Evaluation, including the Debtors’ operations, the Debtors’ employee 

bonus motion, the Debtors’ and UCC’s proposed financial advisor retentions, monthly operating 

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reports, wildfire mitigation, among other financial services. DSI has already commenced work 

assisting the TCC with Claims Evaluation. Under the Revised Scope, Lincoln and DSI have agreed 

that Lincoln will be performing all services related to Asset Evaluation and DSI will solely assist 

in Claims Evaluation. 

21. The TCC respectfully believes it would be unduly prejudiced if it were unable to 

work with its current set of advisors.6 The TCC further does not believe it can find a single advisor 

with both skills sets who has not performed work for the Debtors or major parties in interest relating 

to the Chapter 11 Cases or otherwise.7 

NOTICE 

Notice of this Supplement will be provided to (i) the Debtors; (ii) the Office of the United 

States Trustee for Region 17 (Attn: James L. Snyder, Esq. and Timothy Laffredi, Esq.); (iii) the 

UCC; (iv) those persons who have formally appeared in these Chapter 11 Cases and requested 

service pursuant to Bankruptcy Rule 2002. The TCC respectfully submits that no further notice is 

required. 

WHEREFORE the TCC respectfully requests entry of orders: (a) authorizing the TCC to 

retain and employ Lincoln as its financial advisor on the terms set forth in the Lincoln Application, 

as modified under the Revised Scope; (b) authorizing the TCC to retain and employ DSI as its 

financial advisor on the terms set forth in the DSI Application, as modified under the Revised 

Scope; and (c) granting such other and further relief as the Court may deem just and appropriate. 

Dated: May 3, 2019 

BAKER & HOSTETLER LLP 

By: /s/ Cecily A. Dumas 

Cecily A. Dumas 

Attorneys for The Official Committee of Tort 

Claimants 

 

6

 Lockhart Decl. ¶11. 

7

Id. 

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