UST Objection to Debtors’ Motion for an Order Authorizing Filing Under Seal of the Proposed DIP Financing Fee 

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DONNA S. TAMANAHA (WI 1013199)

Assistant United States Trustee

LYNETTE C. KELLY (SBN 120799)

Trial Attorney 

MARTA E. VILLACORTA (NY SBN 4918280)

Trial Attorney

United States Department of Justice

Office of the U.S. Trustee 

450 Golden Gate Avenue, Suite 05-0153

San Francisco, CA 94102

Telephone: (415) 705-3333

Facsimile: (415) 705-3379

Email: lynette.c.kelly@usdoj.gov;

marta.villacorta@usdoj.gov

Attorneys for James L. Snyder,

Acting United States Trustee for Region 121

UNITED STATES BANKRUPTCY COURT

NORTHERN DISTRICT OF CALIFORNIA

SAN FRANCISCO DIVISION

In re

PG&E CORPORATION,

 Debtor-in-Possession.

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Case No. 19-30088 DM

Chapter 11

In re

PACIFICE GAS AND ELECTRIC 

COMPANY,

 Debtor-in-Possession.

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Case No. 19-30089 DM 

Chapter 11

OBJECTION OF THE UNITED STATES TRUSTEE TO MOTION OF THE 

DEBTORS PURSUANT TO BANKRUPTCY CODE SECTIONS 105(A) 

AND 107(B) AND BANKRUPTCY RULE 9018 FOR ENTRY OF AN ORDER 

AUTHORIZING THE FILING UNDER SEAL OF THE PROPOSED 

DEBTOR-IN-POSSESSION FINANCING FEE LETTERS

 

1 James L. Snyder, Acting United States Trustee for Region 12, is acting in this appointment for Tracy Hope 

Davis, United States Trustee for Region 17, who has recused herself.

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UST Objection to Debtors’ Motion for an Order Authorizing Filing Under Seal of the Proposed DIP Financing Fee 

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The United States Trustee for Region 17 (the “United States Trustee”) files the 

following objection to the Motion (ECF No. 25, the “Seal Motion”) of PG&E Corporation 

(“PG&E Corp.”) and Pacific Gas and Electric Company (the “Utility”), as debtors and debtors 

in possession (collectively, “PG&E” or the “Debtors”) in the above captioned chapter 11 cases 

(the “Chapter 11 Cases”), to permit the Debtors to file under seal certain fee letters (the “Fee 

Letters”) in support of the Debtors’ Motion Pursuant to 11 U.S.C. §§ 105, 361, 362, 363, 364 and 

507, and Fed. R. Bankr. P. 2002, 4001, 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) Approving Use of Cash Collateral of Prepetition 

Bridge Secured Parties, (IV) Granting Adequate Protection to Prepetition Bridge Secured Parties 

and (V) Scheduling Final Hearing (ECF No. 23, the “DIP Financing Motion”). The Debtors’ 

request to file the Fee Letters under seal contravenes Bankruptcy Code Section 107 and, 

therefore, should be denied. In support of his objection, the United States Trustee alleges as 

follows:

I. Background

1. On January 29, 2019 (the “Petition Date”), the Debtors filed voluntary petitions 

for relief under Chapter 11 of the BankruptcyCode.

2. The United States Trustee has not appointed an official Committee of 

Unsecured Creditors. An organizational meeting to do so is scheduled for February 11, 2019, 

at 10:00 a.m. at the Office of the U.S. Trustee, 450 Golden Gate Avenue, Suite 01-5467, San 

Francisco, CA 94102. 

3. On the Petition Date, the Debtors filed the Seal Motion, along with an 

accompanying DIP Motion. 

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UST Objection to Debtors’ Motion for an Order Authorizing Filing Under Seal of the Proposed DIP Financing Fee 

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4. In the Seal Motion, the Debtors seek to file the following under seal:

(i) Fee Letter, dated as of January 21, 2019, by and among the Utility and J.P. 

Morgan Securities LLC and acknowledged by Merrill Lynch, Pierce, 

Fenner & Smith, Incorporated, Barclays Bank PLC and Citigroup Global 

Markets, Inc.

(ii) Fee Letter, dated as of January 21, 2019 (the “Underwriting Fee Letter”) 

by and among the Utility, J.P. Morgan Securities LLC, Merrill Lynch, 

Pierce, Fenner & Smith Incorporated, Barclays Bank PLC and Citigroup 

Global Markets Inc.

Seal Motion at p. 4.

5. Of apparent specific concern are “market flex” provisions in the Underwriting 

Fee Letter. Seal Motion at p. 4. 

II. Jurisdiction and Standing

6. This Court has jurisdiction to hear this objection.

7. Pursuant to 28 U.S.C. §586, the U.S. Trustee is charged with the administrative 

oversight of cases commenced pursuant to chapter 11 of title 11 of the United States Code. This 

duty is part of the U.S. Trustee’s overarching responsibility to enforce the bankruptcy laws as 

written by Congress and interpreted by the courts. See United States Trustee v. Columbia Gas 

Sys., Inc. (In re Columbia Gas Sys., Inc.), 33 F.3d 294, 295-96 (3d Cir. 1994) (noting that the 

U.S. Trustee has public interest standing under 11 U.S.C. §307, which goes beyond mere 

pecuniary interest); Morgenstern v. Revco D.S., Inc. (In re Revco D.S., Inc.), 898 F.2d 498,500 

(6th Cir. 1990) (describing the U.S. Trustee as a watchdog).

8. Pursuant to 11 U.S.C. §307, the U.S. Trustee has standing to be heard with regard 

to this objection.

III. Applicable Law

The Supreme Court stated in Nixon v. Warner Communications, Inc., 435 U.S. 589, 591 

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(1978): “It is clear that the courts of this country recognize a general right to inspect and copy 

public records and documents, including judicial records and documents.” Unanimity in the case 

law demonstrates that there is common law right of access to judicial proceedings and to inspect 

judicial records in civil matters. In Orion Pictures Corp. v. Video Software Dealers Assoc., 21 

F.3d 24 (2d Cir. 1994), the court stated the general rule as: “...a strong presumption of public 

access to court records... This preference for public access is rooted in the public’s first 

amendment right to know about the administration of justice. It helps safeguard the integrity, 

quality, and respect in our judicial system.” 21 F.3d 24, 26 (citations omitted). See also, In re 

Continental Airlines, 150 B.R. 334 (D.Del 1993), where the court noted, ...the strong presumption 

in favor of public access to judicial records and papers...”. Accord, In re Foundation for 

New Era Philanthropy, 1995 WL 478841 (E.D. Pa. 1995); In re Barney’s Inc., 201, B.R. 703 

(Bankr. S.D.N.Y. 1996).

Section 107(a) has been viewed as codifying the common law right of public access to 

court records. The statute provides:

“(a) Except as provided in subsections (b) and (c) of this section and subject to 

section 112, a paper filed in a case under this title and the dockets of a 

bankruptcy court are public records and open to examination by an entity at 

reasonable times without charge.”

Section 107(b)(1) provides limited exceptions to the statutory right of public access to 

certain specified kinds of information, and one of those exceptions is for “confidential 

commercial information”:

“(b) On request of a party in interest, the bankruptcy court shall, and on the 

bankruptcy court’s own motion, the bankruptcy court may –

(1) protect an entity with respect to a trade secret or confidential research, 

development, or commercial information; . . . .

Federal Rule of Bankruptcy Procedure 9018 provides the procedural mechanism for 

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seeking protective relief:

“On motion or on its own initiative, with or without notice, the court may make 

any order which justice requires (1) to protect the estate or any entity in respect of 

a trade secret or other confidential research, development, or commercial 

information . . . “

The burden is on the movants to demonstrate that the interest in secrecy outweighs the 

presumption in favor of access. Bank of America Nat’l Trust & Savings Assoc. v. Hotel 

Rittenhouse Associates, 800 F.2d 339, 344 (3d Cir. 1986); In re Continental Airlines, 150 B.R.

334, 340 (D. Del. 1993).

“Confidential commercial information” is not a defined term within the Bankruptcy 

Code, but it has been addressed in the case law addressing Section 107(b)(1). “Confidential 

commercial information” is “information which would result in ‘an unfair advantage to 

competitors by providing them information as to the commercial operations of the [entity].” In 

re Alterra Healthcare Corp., 353 B.R. 66, 75 (Bankr. D. Del. 2006) (Walrath, J.) (citing In re 

Orion Pictures Corp., 21 F.3d 24, 27-28 (2d Cir. 1994) and Ad Hoc Protective Comm. For 10 

1⁄2% Debenture Holders v. Itel Corp. (In re Itel Corp.), 17 B.R. 942, 944 (9th BAP 1982)). The 

disclosure of such information must “reasonably be expected to cause the entity commercial 

injury.” Alterra, 353 B.R. at 75 (citing In re Northstar Energy, Inc., 315 B.R. 425, 429 (Bank. 

E.D. Tex. 2004) and In re Global Crossing, Ltd., 295 B.R. 720, 725 (Bankr. S.D.N.Y. 2003)). 

“Moreover, the Court must find that information contained in the . . . [documents] . . . ‘is so 

critical to the operations of the entity seeking the protective order that its disclosure will unfairly 

benefit that entity’s competitors.’” Alterra, 353 B.R. at 75-76 (quoting In re Barney’s, Inc., 201 

B.R. 703, 708-09 (Bankr. S.D.N.Y. 1996)). Information is not “‘commercial’ within the meaning 

of § 107(b) merely because it relate[s] to business affairs.” In re Northwest Airlines Corp., 363 

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B.R. 704, 706 (Bankr. S.D.N.Y. 2007). It must be “information which would give a competitor 

an unfair advantage.” Id. (quoting In re Handy Andy Home Improvement Centers, Inc., 199 B.R. 

376, 382 (Bankr. N.D. Ill. 1996). 

The sealing analysis should also take into account whether the filings are made pursuant 

to bankruptcy rules specifically requiring the public disclosure of information. See Northwest 

Airlines, 363 B.R. at 707-08 (“we start with the fact that Bankruptcy Rule 2019 is a disclosure 

rule”). In re Foundation for New Era Philanthropy, 1995 WL 478841 (Bankr. E.D. Pa. May 18, 

1995) (disclosure of creditor list required under Fed. R. Bankr. P. 1007).

One of the hallmarks of bankruptcy law is the full and extensive disclosure required of 

debtors with respect to their financial affairs. For debtor-in-possession financing, Federal Rule of 

Bankruptcy Procedure 4001(c) sets forth the required disclosures. Rule 4001(c)(1)(B) specifically

provides:

The motion shall ... begin with a concise statement of the relief requested ... that lists 

or summarizes, and sets out the location within the relevant documents of, all 

material provisions of the proposed credit agreement and form of order, including 

interest rate, maturity, events of default, liens, borrowing limits, and borrowing 

conditions.

This rule is supplemented by Northern District of California Guidelines for Cash 

Collateral & Financing Motions & Stipulations (Effective 1/1/2006) at 

http://www.canb.uscourts.gov/procedure/guidelines-cash-collateral-financing-motionsstipulations-effective-112006. The Guidelines contain, among other things requirements for 

disclosure of all material provisions of a borrowing agreement.

IV. The Debtors Have Not Sustained Their Burden of Proof

In the Seal Motion, the Debtors assert that the Fee Letters in their entirety constitute 

proprietary information not typically disclosed to the public or to competing financial 

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institutions. Seal Motion at 6, 7. The parties do not want the Fee Letters disclosed because 

“the Debtors and Commitment Parties” simply agreed to this. Seal Motion at 4. Such 

assertions do not demonstrate that the information set forth in the Fee Letters is, in fact, 

commercially sensitive information. Contrary to the Debtors’ assertions, it is routine to 

disclose the terms of DIP Motion. Disclosure of information related to the fees and charges is

essential to the parties’ ability to determine whether the loans are in the best interests of the 

estate and its creditors. As bankruptcy is a transparent process, creditors and other parties in 

interest have the right to review such information. This is consistent with the required 

disclosure of other payments by debtors are also routinely disclosed as part of the bankruptcy 

process, including the statement of financial affairs and the monthly operating reports. 

Even if the Debtors can successfully demonstrate that there may be one or more terms of 

the Fee Letters that may be protected under Section 107(b) or Rule 9018, the relief granted 

should be narrowly tailored. See In re Lomas Financial Corporation, 1991 WL 21231, at *2 

(S.D.N.Y. 1991). At the very most, the so called “Flex Market” information that comports with 

the requirements of either Section 107 (b) or FRBP 9018 should be redacted and sealed on a 

temporary basis, with the right of the parties to revisit the issue after a Committee is appointed 

in these cases. 

V. Conclusion

The Bankruptcy Code and Rules place narrow limits upon sealing documents. The 

requirements of the Bankruptcy Code and Rules express the necessary public interest in this 

matter requiring full disclosure.

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WHEREFORE, the United States Trustee requests that the Court deny the Seal Motion

and grant such other and further relief as the Court deems appropriate.

Dated: January 31, 2019 James L. Snyder

Acting United States Trustee, Region 12

/s/ Lynette C. Kelly 

Trial Attorney

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