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TIMOTHY S. LAFFREDI (WI SBN 1055133)

Assistant United States Trustee 

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: timothy.s.laffredi@usdoj.gov;

marta.villacorta@usdoj.gov

Attorneys for Andrew R. Vara, Acting United States Trustee for Region 31

UNITED STATES BANKRUPTCY COURT

NORTHERN DISTRICT OF CALIFORNIA

SAN FRANCISCO DIVISION

In re:

PG&E CORPORATION,

- and -

Bankruptcy Case

No. 19-30088 (DM)

Chapter 11

(Lead Case)

(Jointly Administered)

Date: June 12, 2019

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

Place: United States Bankruptcy Court

 Courtroom 17, 16th Floor

 San Francisco, CA 94102

[ECF No. 2197]

PACIFIC 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)

LIMITED OBJECTION OF THE UNITED STATES TRUSTEE TO THE 

APPLICATION PURSUANT TO 11 U.S.C. §§ 327 AND 328 FOR AN ORDER 

AUTHORIZING EMPLOYMENT AND RETENTION OF DELOITTE & TOUCHE LLP 

AS AUDITOR AND ADVISOR NUNC PRO TUNC TO THE PETITION DATE (ECF 

No. 2197)

In support of his limited objection (the “Limited Objection”) to the Application Pursuant 

 

1 Andrew R. Vara, Acting United States Trustee for Region 3, is acting in this appointment for Tracy Hope Davis, 

United States Trustee for Region 17, who is recused from the above-captioned cases.

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to 11 U.S.C. §§ 327 and 328 for an Order Authorizing Employment and Retention of Deloitte & 

Touche LLP as Auditor and Advisor Nunc Pro Tunc to the Petition Date (ECF No. 2197, 

“Application”), Andrew R. Vara, the Acting United States Trustee for Region Three (“U.S. 

Trustee”), through his undersigned counsel, states as follows:

1. This Court has jurisdiction to hear the Limited Objection. 

2. 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 (the 

“Bankruptcy 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”). 

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

to the Objection.

4. On January 29, 2019 (the “Petition Date”), the Debtors commenced the abovecaptioned cases by filing voluntary petitions for relief under Chapter 11 of the Bankruptcy Code. 

See ECF No. 1. No trustee has been appointed in the Debtors’ cases. See generally Case 

Dockets

5. On February 12, 2019, the United States Trustee appointed an Official Committee 

of Unsecured Creditors (the “Committee”). See ECF No. 409. On February 15, 2019, the 

United States Trustee appointed an Official Committee of Tort Claimants. See ECF No. 453.

6. The Debtors filed the Application on May 22, 2019. 

I.

INTRODUCTION

The United States Trustee does not necessarily object to the retention of DeLoitte & 

Touche (“DeLoitte”), but objects to certain aspects of its retention, namely because the Debtor 

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has failed to satisfy its burden of showing that the Application meets the requirements of 

Bankruptcy Code Section 327(a) and Rule 2014 of the Federal Rules of Bankruptcy Procedure.2

Specifically,

• The Application requests nunc pro tunc relief to the petition date but the Debtor 

has made no showing to support such relief. If the Court determines that the 

Application should be approved, the U.S. Trustee objects to the nunc pro tunc

approval of the Application on this record.

• It is unclear whether DeLoitte intends to seek reimbursement for defense of its fee 

applications. The Order should contain a provision prohibiting reimbursement for 

fees incurred in defense of fee applications.

Accordingly, the Application should be denied as to these requests. If the Court 

determines that the Application and Declaration contain sufficient information to grant retention 

on an interim basis, the U.S. Trustee reserves all rights, including the right to discovery and an 

evidentiary hearing, to supplement this Limited Objection, and to seek disgorgement of amounts 

paid by the Debtor.

II.

STATEMENT OF FACTS

7. Debtor commenced this case by filing a voluntary petition under Chapter 11 of 

the Bankruptcy Code on January 29, 2019 (the “Petition Date”). [ECF No. 1]. The Application 

was filed on May 22, 2019 [ECF No. 2197]. 

8. The Application was accompanied by the Declaration of Timothy Gillam in 

Support of the Application [ECF No. 2198]. The Engagement Agreements attached as exhibits 

to the Application are dated February 19, 2019. The Applications were thus not filed until 

approximately ninety days later. 

 

2 Hereinafter, all references to “Section” in the Motion are to provisions of the Bankruptcy Code, title 11 of the 

United States Code, 11 U.S.C. §§ 101-1532 as amended, unless otherwise indicated. All references to “FRBP” are to 

the Federal Rules of Bankruptcy Procedure.

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9. The Engagement Agreements indicate that DeLoitte intends to be reimbursed for 

expenses. It is unclear as to whether or not DeLoitte intends to seek compensation for 

reimbursement of attorney fees incurred in defense of fee applications. 

III.

ARGUMENT

A. The Request for Nunc Pro Tunc Relief Should Be Denied Because the 

Application Does Not Demonstrate That It Satisfies the Ninth Circuit’s 

Governing Standard.

The Application states that it seeks nunc pro tunc employment, but fails to cite any 

applicable case law or provide analysis as to how it satisfies Ninth Circuit standards.

“Court approval of the employment of counsel for a debtor in possession is sine qua non

to counsel getting paid. Failure to receive court approval for the employment of a professional in 

accordance with § 327 and Rule 2014 precludes the payment of fees.” DeRonde v. Shirley (In re

Shirley), 134 B.R. 940, 943 (9th Cir. B.A.P. 1992) (citation omitted). “There is just no hardship 

in requiring attorneys to observe the strict requirements of § 327 because professionals are 

charged with knowledge of the law.” In re Downtown Investment Club III, 89 B.R. 59, 63-64 

(9th Cir. B.A.P. 1988).

The Ninth Circuit has limited the grant of retroactive employment orders to cases in 

which exceptional circumstances are demonstrated. In re Occidental Fin. Group, Inc., 40 F.3d 

1059, 1062 (9th Cir. 1994). To establish the presence of exceptional circumstances, 

professionals seeking retroactive approval must satisfy two requirements: they must (1) 

satisfactorily explain their failure to receive prior judicial approval; and (2) demonstrate that 

their services benefitted the bankrupt estate in a significant manner.” Atkins v. Wain, Samuel & 

Co. (In re Atkins), 69 F.3d 970, 974 (9th Cir. 1995).

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10. Here, the Application was filed more than 90 days after the Engagement 

Agreements were entered into. The Application does not cite, let alone argue, either of the two 

Atkins factors. It therefore fails to demonstrate “exceptional circumstances.” Id. 

B. There is no Reimbursement of Fees Incurred Defending Fee Applications 

11. The Engagement Agreements indicate that DeLoitte intends to be reimbursed for 

expenses. It is unclear as to whether or not DeLoitte intends to seek compensation for 

reimbursement of attorney fees incurred in defense of fee applications. Reimbursement for fees 

incurred in defense of fee applications is not compensable by the estate as held by the U.S. 

Supreme Court in Baker Botts LLP v ASARCO LLC, 135 S. Ct. 2158 (2015). The U.S. Trustee 

recommends that the following or similar language be included in any Order approving the 

Application. 

IV.

CONCLUSION

12. The Application was not filed in a timely manner. The Applicant has not 

demonstrated that the Application should be granted nunc pro tunc to the Petition Date. The 

Order should clarify that the Applicant may not seek reimbursement for fees incurred in defense 

of fee applications. 

WHEREFORE the U.S. Trustee requests that this Court issue an order denying the 

Applications to the extent of this Objection and/or granting such other relief as this Court deems 

appropriate, fair and just.

Dated: June 5, 2019 Andrew R. Vara

Acting United States Trustee, Region 3

/s/ Timothy S. Laffredi 

Assistant United States Trustee

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