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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) 

OBJECTION OF THE OFFICIAL 

COMMITTEE OF TORT CLAIMANTS 

TO CORRECTED MOTION OF 

DEBTORS PURSUANT TO 11 U.S.C. § 

1121(d) TO EXTEND EXCLUSIVITY 

PERIODS (DKT. NO. 1797) 

Date: May 22, 2019 

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

Place: United States Bankruptcy Court 

 Courtroom 17, 16th Floor 

 San Francisco, CA 94102 

Objections Due: 

May 15, 2019 at 4:00 p.m. (Pacific Time)

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TABLE OF CONTENTS 

Page 

I. SUMMARY OF ARGUMENT .............................................................................. 1 

II. FACTUAL BACKGROUND ................................................................................. 3 

A. PG&E’s History of Callous Indifference to Safe Operations ..................... 3 

San Bruno, California.............................................................................................. 3 

Butte Fire ................................................................................................................. 4 

North Bay Fires ....................................................................................................... 5 

Camp Fire ................................................................................................................ 5 

B. PG&E’s Financial Mismanagement ................................................................ 6 

C. The Debtors’ Bankruptcy Filings .................................................................... 6 

D. The Debtors’ Post-Petition Misconduct........................................................... 7 

E. The New Board Cannot be Relied Upon to Change PG&E’s Corporate 

Culture ............................................................................................................. 8 

F. The Tort Claimants Are Increasingly at Risk With the Passage of Time ...... 11 

III. ARGUMENT ........................................................................................................ 11 

IV. NOTICE ................................................................................................................ 16 

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TABLE OF AUTHORITIES

 Page(s) 

Cases 

In re All Seasons Indus., Inc., 

121 B.R. 1002 (Bankr. N.D. Ind. 1990) ........................................................................12, 13, 14 

In re Am. Fed’n of Television & Radio Artists, 

30 B.R. 772 (Bankr. S.D.N.Y. 1983) ........................................................................................12 

In re Dow Corning Corp., 

208 B.R. 661 (Bankr. E.D. Mich. 1997) .............................................................................13, 15 

In re Gen. Bearing Corp., 

136 B.R. 361 (Bankr. S.D.N.Y. 1992) ......................................................................................12 

In re GMG Capital Partners III, L.P., 

503 B.R. 596 (Bankr. S.D.N.Y. 2014) ..........................................................................11, 12, 13 

In re McLean Indus., Inc., 

87 B.R. 830 (Bankr. S.D.N.Y. 1987) ........................................................................................13 

In re Mother Hubbard, Inc., 

152 B.R. 189 (Bankr. W.D. Mich. 1993) ............................................................................12, 14 

Official Cmte. Of Unsecured Creditors v. Henry Mayo Newhall Memorial Hosp. 

(In re Henry Mayo Newhall Memorial Hosp.), 

282 B.R. 444 (9th Cir. BAP 2002) ................................................................................13, 14, 15 

In re R.G. Pharmacy, Inc., 

374 B.R. 484 (Bankr. D. Conn. 2007) ......................................................................................14 

In re Sharon Steel Corp., 

78 B.R. 762 (Bankr. W.D. Pa. 1987) ..................................................................................12, 14 

In re Timbers of Inwood Forest Assoc., Ltd.

808 F.2d 363 (5th Cir. 1987) (en banc) .....................................................................................12 

Statutes 

11 U.S.C. § 1121(d) ........................................................................................................................11 

11 U.S.C. §1121(d)(1) .................................................................................................................1, 11 

Rules 

Bankruptcy Rule 2002.....................................................................................................................16 

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Other Authorities 

7 Collier on Bankruptcy ⁋ 1121.11[4] ...........................................................................................12 

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The Official Committee of Tort Claimants (the “TCC”), in the above-captioned chapter 11 

cases (the “Cases”) of PG&E Corporation (“PG&E”) and Pacific Gas and Electric Company (the 

“Utility” and collectively with PG&E, the “Debtors”), by and through its undersigned counsel, 

hereby objects (the “Objection”) to the Corrected Motion of Debtors Pursuant to 11 U.S.C. § 

1121(d) to Extend Exclusivity Periods (the “Motion”). In support of this Objection, the TCC 

respectfully states as follows: 

I. SUMMARY OF ARGUMENT 

1. The Debtors have admitted that they will resist any reorganization plan that does not 

include reform of wildfire liability laws. What the Debtors really mean, but will not say, is that 

they refuse to propose a plan under which interests of equity security holder may be impaired or 

wiped out. The Debtors will not admit this fact because their major shareholders now have control 

of the boards of directors and will not propose a plan that reflects the true enterprise value of the 

Debtors. A feasible plan exists, one under which creditors of the Utility, including tort claimants 

(the “Tort Claimants”), may be paid in full. Since the Debtors refuse to consider any plan that 

does not include a bailout from the State of California and higher rates for the Utility’s ratepayers 

instead of a reduction in market cap, they have forfeited the exclusive right to file a plan. 

2. The Debtors cannot demonstrate “cause” for an extension under Bankruptcy Code 

§1121(d)(1) for two reasons. First, the Debtors have no control over whether or when changes in 

the law will occur. The Debtors contend that all stakeholders need to support a solution, and that 

“it’s going to require a significant amount of work by not just those in Sacramento but by all of the 

stakeholders” to achieve a “common outcome.” Transcript of Meeting of Creditors on April 29, 

2019, 79:5-9 (the “341 Transcript”). The Debtors have said they cannot reorganize without 

legislative relief, so they are not entitled to have a continued exclusive period while they wait to 

see if the law changes, while blocking creditors from proposing a plan that is confirmable without 

change in the law. 

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3. Second, the Debtors purported solvency is much in doubt. The Debtors list the value 

of their assets as approximately $61.7 billion in their Summaries of Assets and Liabilities for NonIndividuals [ECF Nos. 897 & 903]. The Debtors reported in their SEC filings that the liability they 

face from the 2017 and 2018 wildfires may exceed $30 billion. In Schedules E/F, filed on March 

14, 2019, the Debtors list wildfire-related claims as “contingent, disputed and unliquidated,” and 

attribute no dollar amount to the claims, thereby rendering the schedules useless as a meaningful 

source of information regarding the Debtors’ liabilities [ECF Nos. 900 & 906]. When the amount 

of the DIP loans, administrative claims and undisputed prepetition claims of approximately $41.5 

billion1 are added to the Debtors’ own estimate of their potential wildfire exposure of $30 billion, 

it becomes clear that the equity cushion is illusory. 

4. The Debtors’ new boards, now controlled by nominees proposed by investors 

BlueMountain Capital Management, Knighthead Capital Management, Redwood Capital 

Management and Abrams Capital Management, are highly unlikely to propose a realistic plan of 

reorganization within a reasonable period of time. In the meantime, tens of thousands of victims 

of the Debtors’ criminal and negligent conduct await payment of their claims, many of whom will 

lose certain benefits under their insurance policies before the expiration of the Debtors’ proposed 

exclusivity period. Under the circumstances, the Debtors should not be granted the privilege of 

blocking any other party from filing a plan. 

5. Finally, the Debtors’ despicable conduct prior to and during these Cases, as set forth 

in detail below, weighs heavily against the Court’s exercise of its discretion to grant an extension 

of the Debtors’ exclusive periods at all, much less the six-month period the Debtors request. 

 

 

1

 Assumptions: Utility Debt: DIP fully drawn, $5.5 billion; Administrative expenses/priority claims, $1.0 billion; 

Utility bond and bank debt, $21.5 billion; Subrogation claims, $10 billion; Public entity claims, $2.0 billion; Trade 

claims, $2.0 billion. HoldCo Debt: Utility preferred stock, $300 million; Bank debt, $700 million. (No rejection 

damages claims, which may be substantial, are included in these assumptions.) 

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II. FACTUAL BACKGROUND 

A. PG&E’s History of Callous Indifference to Safe Operations 

San Bruno, California 

6. The Debtors have a long history of failing to operate safely (think Erin Brockovich), 

but the recent disasters the Debtors caused start with the explosion of its underground gas pipeline 

on September 9, 2010, in the Crestmoor residential neighborhood of San Bruno, California. The 

explosion and resulting fire killed eight people and damaged or destroyed 108 homes. 

7. The National Transportation Safety Board’s (“NTSB”) 135-page Accident Report 

dated September 9, 2010 (“Accident Report”) (United States. National Transportation Safety 

Board. 2011. Pacific Gas and Electric Company, Natural Gas Transmission Pipeline Rupture and 

Fire, San Bruno CA, Sept. 9, 2010. Pipeline Accident Report NTSB/PAR-11/01. Washington, DC) 

found that the Utility’s entire organizational culture was at fault: “Organizational accidents have 

multiple contributing causes, involve people at numerous levels within a company, and are 

characterized by a pervasive lack of proactive measures to ensure adoption and compliance with 

a safety culture. Moreover, organizational accidents are catastrophic events with substantial loss 

of life, property, and environment; they also required complex organizational changes in order to 

avoid them in the future.” Accident Report, p. 117 (emphasis added). The NTSB further pointedly 

noted: “The character and quality of [the Utility’s] operation, as revealed by this investigation, 

indicate that the San Bruno pipeline rupture was an organizational accident. [The Utility] did not 

effectively utilize its resources to define, implement, train, and test proactive management controls 

to ensure the operational and sustainable safety of its pipelines.” Accident Report, p. 117. 

8. Christopher Hart, the Debtors’ newly-appointed Special Independent Safety 

Advisor, was Vice Chair of the NTSB and a signatory on the report. In a separate concurrence and 

dissent, Vice Chair Hart repeatedly referred to the San Bruno disaster that killed eight people as a 

“mishap,” and his comments appeared calculated to let the operator off the hook. Vice Chair Hart 

instead blamed a lack of coordination between “safety regulators” and “economic regulators.” 

Accident Report, pps. 136-137. 

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9. On April 1, 2014, the Utility was indicted by a federal grand jury in the United States 

District Court for the Northern District of California for twelve violations of the Natural Gas 

Pipeline Safety Act of 1968. United States of America v. Pacific Gas and Electric Company, Case 

No. 3:14-cr-00175 (WHA) (N.D. Cal.) (the “Criminal Action”) [Criminal Action, ECF No. 1]. 

According to the Indictment, the charges stemmed from the Utility’s record-keeping and pipeline 

integrity management practices. The Indictment alleged that the Utility failed to address 

recordkeeping deficiencies concerning its larger natural gas pipelines knowing that their records 

were inaccurate or incomplete. Indictment at ⁋⁋ 22-22. On August 9, 2016, the jury found the 

Utility guilty of six of the 12 counts in the Indictment. Verdict Form [Criminal Action, ECF No. 

884]. 

10. According to a ruling of the assigned commissioner of the California Public Utilities 

Commission (“CPUC”), “[The Utility] faced historically significant administrative penalties and 

fines and criminal punishment as a result of the San Bruno explosion.” Assigned Commissioner’s 

Scoping Memo and Ruling dated December 21, 2018 (“Scoping Memo and Ruling”), 

Investigation 15-08-019, p. 4. The CPUC imposed a fine and other penalties on the Utility totaling 

$1.6 billion. Scoping Memo and Ruling, p. 4. As part of the sentence in the Criminal Action, the 

Utility was required to submit to a federal monitor for compliance and ethics. In February 2017, 

Mark Filip was selected as the Compliance and Ethics Monitor of the Utility for a period of five 

years. Scoping Memo and Ruling, p. 4, n.4. 

Butte Fire 

11. The Butte Fire, which started in Calaveras County, California, on September 9, 

2015, burned approximately 70,000 acres, destroyed 921 structures and killed two people. Scoping 

Memo and Ruling, p. 6. The CPUC’s Safety and Enforcement Division (SED) issued the Utility a 

citation for $8 million for safety violations, and $300,000 for its failure to timely report to the 

CPUC that its facilities may have been linked to the ignition of the Butte Fire. Scoping Memo and 

Ruling, p. 7. 

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12. The California Department of Forestry & Fire Protection (“Cal Fire”) found that 

the Utility and/or its vegetation management contractors—ACRT Inc. and Trees, Inc.—failed to 

identify potential hazards during its vegetation management program, which led to PG&E’s 

equipment igniting the fire. 

North Bay Fires 

13. The North Bay Fires, which started on October 8, 2017, consisted of twenty-one 

(21) major fires that spread throughout Butte, Humboldt, Lake, Mendocino, Napa, Nevada, Sonoma 

and Yuba counties. According to the October 30, 2017 report issued by Cal Fire, the North Bay 

Fires consumed more than 245,000 acres and 8,900 structures. Forty-four (44) people perished due 

to the North Bay Fires. Amended Declaration of Jason P. Wells in Support of First Day Motions 

at p. 13 [ECF No. 263]. 

14. Cal Fire has determined that the Utility is responsible for at least eighteen (18) of 

the twenty-one (21) fires. The North Bay Fires are also being investigated by CPUC’s Safety and 

Equipment Divisions. Amended Declaration of Jason P. Wells in Support of First Day Motions at 

p. 11 [ECF No. 263]. 

Camp Fire 

15. According to Cal Fire’s Camp Fire Incident Information Website as of January 4, 

2019 (“Cal Fire Website”

2

), the Camp Fire began on November 8, 2018, on Pulga Road and Camp 

Creek Road, near Jarbo Gap in Butte County. The Camp Fire destroyed 153,336 acres, 13,972 

residences, 528 commercial buildings and 4,293 other types of buildings. The Camp Fire took 

eighty-six (86) lives. Cal Fire Website. The Camp Fire was the deadliest and most destructive 

wildfire in modern California history. On May 15, 2019, the date of this Objection, Cal Fire issued 

a News Release stating that the Debtors caused the Camp Fire. 

16. The Debtors’ Form 8-K, filed on February 28, 2019, states in part that “PG&E 

Corporation believes it is probable that the Utility’s equipment will be determined to be an ignition 

point of the 2018 Camp fire.” PG&E 8K Report at p. 2 

 

2 http://cdfdata.fire.ca.gov/incidents/incidents_details_info?incident_id=2277

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B. PG&E’s Financial Mismanagement 

17. PG&E has not maintained fit financial condition. In 2009, the Debtors reported 

$12.8 billion in total funded debt in their SEC filings. By 2018, total funded debt had increased to 

$22 billion, almost doubling in eight years. And, during this period of time, PG&E paid 

increasingly higher dividends on common stock. In 2009, PG&E paid $600 million in dividends. 

In 2017, it paid $1 billion in dividends. In fact, between 2009 and 2018, PG&E paid a total of $7.1 

billion in dividends. 

18. The Debtors borrowed to fund the payment of dividends to shareholders. The 

Debtors lost money on an operating basis between 2009 and 2018. During the same period of time, 

the Debtors reduced expenditures for maintenance and safety, and even redirected funds earmarked 

to safety to other uses. 

C. The Debtors’ Bankruptcy Filings 

19. On the Petition Date, the Debtors commenced these Cases by filing voluntary 

petitions for relief under chapter 11 of title 11 of the United States Code (the “Bankruptcy Code”). 

20. The Debtors are operating their businesses as debtors in possession pursuant to 

sections 1107(a) and 1108 of the Bankruptcy Code. No trustee or examiner has been appointed in 

the Cases. 

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

an Appointment of the Official Committee of Tort Claimants [ECF 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 [ECF 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. 

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. 

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22. On May 1, 2019, the Debtors filed the Motion, seeking to extend the exclusivity 

period through and including November 29, 2019. The Debtors have reserved their rights to seek 

additional extensions of the exclusivity period. 

D. The Debtors’ Post-Petition Misconduct 

23. The Utility has violated the terms of its probation in the Criminal Action. Judge 

Alsup, who presides over the Criminal Action, noted as recently as May 7, 2019 that “PG&E has 

been starting a lot of fires” and that “I just don’t think PG&E has put safety first. The ads all say it 

does, but I think if you look at the record, PG&E has allowed things to slide on the safety front, 

particularly on the fire part...” Transcript of Proceedings, Criminal Action, May 7, 2019 

(“Transcript”), 10:12-17. Judge Alsup concluded the hearing by stating that “no one has started 

more fires than PG&E.” Transcript, 14:5. The Utility’s ongoing failure to properly redress its 

safety issues and violations resulted in Judge Alsup entering an Order Adopting New Conditions 

of Probation on May 14, 2019 (The “New Probation Order”) [Criminal Action, ECF No. 1071]. 

One of the conditions of probation is that the Utility’s Board of Directors, Chief Executive Officer 

and others will visit San Bruno and Paradise “to gain a firsthand understanding of the harm inflicted 

on those communities and meet with victims and other stakeholders such as fire-fighting personnel 

and/or city officials.” New Probation Order at p. 1. 

24. On April 29, 2019, the United States Trustee convened a meeting of creditors 

pursuant to Bankruptcy Code §341(a). Jason Wells, CFO of the Debtors, testified in response to 

the examination of the U.S. Trustee regarding the Debtors’ current plan for reorganization: “We 

currently don’t have a plan of reorganization....Until we have a better handle on total claims 

exposure as well as the legislation to reform wildfire liability laws, we are not in a position to be 

able to put forward a plan of reorganization. 341 Transcript, 13:6-12 (emphasis added). These 

Cases may be the first time a debtor has argued that it cannot reorganize without a change in the 

laws governing its operations. 

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E. The New Board Cannot be Relied Upon to Change PG&E’s Corporate 

Culture 

25. The Preliminary Proxy Statement filed by the Debtors with the Securities and 

Exchange Commission on April 26, 2019 (the “Proxy Statement”) is instructive on whether the 

recent boards “refreshments” herald a new era of operational and safety responsibility that merits 

deference. The Proxy Statement’s disclosure on the refreshed Safety and Nuclear Oversight 

Committee (the “Safety Committee”) is an apt starting point. The Safety Committee now 

comprises six members: Cheryl Campbell (Chair), Jeffrey Bleich, Nora Brownell, Fred Fowler, 

Eric Mullins and Kristine Schmidt. Ms. Campbell, in her position as President of WestGas 

InterState, a subsidiary of Xcel Energy, was cited on October 12, 2017 by the Pipeline and 

Hazardous Materials Safety Administration for violation of pipeline safety regulations relating to 

the frequency of patrols of lines and the frequency of transmission line leakage surveys, and pled 

no contest. See, Notice of Probable Violation and Proposed Compliance Order dated October 12, 

2017 & Final Order dated March 8, 2019, Matter of WestGas InterState, Inc., a Subsidiary of Xcel 

Energy, Inc., CPF No. 5-2017-1012 U.S. Dept. of Transportation, Pipeline and Hazardous Materials 

Safety Administration, Office of Pipeline Safety, Washington, D.C. 20590. 

26. Mr. Bleich, according to the Proxy Statement, is a lawyer and former U.S. 

Ambassador to Australia. The Proxy Statement does not identify any utility safety experience or 

expertise for Mr. Bleich. Ms. Brownell, according to the Proxy Statement, is a former FERC 

Commissioner and former member of the Pennsylvania Public Utilities Commission. The closest 

the Proxy Statement comes to claiming safety experience or expertise for Ms. Brownell is a 

statement that she “has been an advocate for consumer protection.” (Proxy Statement p. 23) 

27. The Proxy Statement says that Mr. Fowler has been a board member of the Debtors 

since 2012. Notwithstanding the Debtors’ abysmal safety record between 2012 and now, the Proxy 

Statement touts Mr. Fowler as “bring[ing] extensive knowledge and over 45 years of experience in 

utility company operations , including safety . . . .” (Proxy Statement p. 24). Mr. Mullins, who the 

Proxy Statement discloses is in the private equity industry and is a former investment banker at 

Goldman Sachs & Co., has served on the Debtors’ boards since September 2016. The Proxy 

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Statement identifies no utility safety experience or expertise for Mr. Mullins. The Proxy Statement 

identifies Ms. Schmidt as an electric industry veteran and consultant, but does not refer to any 

particular safety experience or expertise that she has. 

28. Moving from the Safety Committee (which as we have noted is chaired by a new 

board member recently cited for utility safety violations and includes two legacy board members 

who were on the Debtors’ boards for the 2017 and 2018 wildfires), we also derive no confidence 

regarding more responsible utility operations from the remainder of the refreshed boards of the 

Debtors. These boards now include one more utility industry veteran, four hedge fund executives, 

a bond fund denizen, and a career U.S. State Department employee. 

29. The Proxy Statement proclaims that William D. Johnson, PG&E’s new Chief 

Executive Officer (the “CEO”), presided over the TVA during a period in which “the organization 

achieved the best safety records in its 85-year history . . . .” Correlation is not necessarily causation, 

however, and nothing in the Proxy Statement evidences a causal link between the refreshed boards 

of the Debtors and excellence in utility operations or safety performance that warrants a 

presumption that life for the Debtors and their stakeholders has suddenly become better. 

30. Judge Alsup certainly does not believe he can simply sit back and relax now that 

Mr. Johnson has arrived from Tennessee. When Mr. Johnson informed the Court at a hearing on 

May 7, 2019, in the Criminal Action that he had come to PG&E to “help make outcomes better,” 

the Court responded that “I don’t really care how much money PG&E makes, but I do care about 

the safety of the people who live in California.” Transcript, 10:10-11. The Court continued: “And 

one of the biggest problems we’ve had is that PG&E has been starting a lot of fires, and they had 

that horrible explosion in San Bruno, and I just don’t think PG&E has put safety first. The ads all 

say that it does, but I think if you look at the record, PG&E has allowed things to slide on the safety 

front, particularly on the fire part....” Transcript, 10:12-17. In fact, Judge Alsup apparently has so 

little faith that Mr. Johnson and the new board get it, that he ordered the board and PG&E’s senior 

executive leadership to meet with victims and local officials in Paradise and San Bruno and tour 

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those communities “so that the leadership can see the gravity of what happened up there.” 

Transcript, 12:4-7. 

31. Additional disclosures in the Proxy Statement (for which the refreshed boards of the 

Debtors are responsible) underscore the low prospects for a sea change. On page 37, the Proxy 

Statement posits that, contrary to the inference that might fairly be drawn from the reality of the 

2017 and 2018 fires, the Debtors have long been focused on safety: “Since the San Bruno tragedy 

in 2010, the Boards have continuously sought to enhance the quality of oversight for risk 

management . . . and safety.” On page 55: “We believe that [the appointments of Mr. Johnson as 

CEO and of the refreshed boards] position us to continue to improve our safety and operational 

effectiveness.” (Italics added.) On page 65: the Compensation “Committee adopted a STIP 

structure [for 2018] that continued the Debtors’ focus on improving public and employee and 

contractor safety . . . .” (Italics added) On page 11, the Proxy Statement (read, each of the refreshed 

boards) recommends shareholder approval of the 2018 compensation paid to the Debtors’ named 

executive officers, based on the refreshed boards’ stated belief that the Debtors’ “compensation 

policies and practices were effective in achieving the companies’ goals of rewarding sustained 

financial and operating performance and excellence . . . .” 

32. And then, against that soothing backdrop to which the refreshed boards subscribe, 

one wonders what to make of this statement in their letter to the Debtors’ shareholders: “We 

replaced PG&E[‘s] CEO and the vast majority of our Boards of Directors with experienced people 

with the commitment and expertise necessary to redirect our safety culture . . . .” (Italics 

added) Who knows? But it is not an irrational fear that the refreshed boards’ discordant messages 

are just the same old empty words on new pages, signifying the same detachment from on-theground reality that has brought the Debtors and their stakeholders to their current state. 

33. Certainly, the fact that one of the boards’ first steps was to hire Mr. Hart does not 

inspire confidence. He views the San Bruno destruction of a residential neighborhood as a mere 

“mishap,” and appeared to blame conflicting goals of “safety regulators” and “economic 

regulators” as the problem, instead of PG&E as the operator. Safety Report, Vice Chairman Hart, 

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concurrence and dissent, pp. 136-139. And, his weak response was before the NTSB learned that 

PG&E lied to it about the pressures in its gas lines before the pipe erupted. Verdict. Mr. Hart 

cannot be relied upon to properly advise the boards with respect to the Debtors’ abysmal safety 

culture. 

F. The Tort Claimants Are Increasingly at Risk With the Passage of Time 

34. Many of the Tort Claimants are still without homes or even safe shelter, including 

victims of the Butte Fire. 341 Transcript, 118:22-25, 119:1-3, 141:22-25 & 142:1-5. Even those 

Tort Claimants who have insurance are often underinsured, or are at risk of exhausting their 

benefits. 

35. Several of the Tort Claimants have been relying on alternative living expense 

benefits from their homeowners’ policies to cover the expenses for their temporary housing. 

Critically, in October 2019, which will be during the exclusivity period if the Court grants the 

Motion, roughly 7,000 families who were impacted by the North Bay Fires will lose their 

alternative living expense benefits. By the end of December 2019, approximately 1,000 more 

families, this time from the Thomas Fire, will lose their benefits. The passage of time will only 

add to the number of Tort Claimants who exhaust their insurance coverage. These Tort Claimants 

will be forced to try to come up with the funds to cover both the expenses on their destroyed homes, 

including mortgage expenses, and expenses for their temporary residences. Many simply cannot 

afford to pay for two dwellings. As a result, Tort Claimants will face the prospect of defaulting on 

their obligations, with the attendant damage to their economic health and emotional well-being. 

Even those fortunate enough to have the means to pay for two dwellings should not be forced to do 

so. It is fundamentally unfair for the Tort Claimants, who have already lost too much, to be 

damaged any more.3

 

3

 The TCC is aware of the Debtors’ Motion Pursuant to 11 U.S.C. §§ 105(a) and 363(b) and Fed. R. Bankr. P. 2002 

and 6004(h) for an Order (A) Authorizing Debtors to Establish and Fund Program to Assist Wildfire Claimants with 

Alternative Living Expenses and Other Urgent Needs and (B) Granting Related Relief (“Wildfire Assistance Program

Motion”) (Dkt. No. 1777). While the TCC welcomes relief, the scope and amount of the proposed fund are woefully 

inadequate to meet the current needs of the Tort Claimants, let alone their needs as their insurance runs out. 

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III. ARGUMENT 

36. Section 1121(d) of the Bankruptcy Code permits a court, upon a showing of “cause,” 

to reduce or increase the 120-day period during which a debtor has the exclusive right to file a plan 

of reorganization. 11 U.S.C. § 1121(d)(1). “[C]ourts have not hesitated to deny a first motion to 

extend exclusivity where the circumstances warrant it.” In re GMG Capital Partners III, L.P., 503 

B.R. 596, 601 (Bankr. S.D.N.Y. 2014), citing, In re Gen. Bearing Corp., 136 B.R. 361 (Bankr. 

S.D.N.Y. 1992); In re All Seasons Indus., Inc., 121 B.R. 1002 (Bankr. N.D. Ind. 1990); In re Am. 

Fed’n of Television & Radio Artists, 30 B.R. 772 (Bankr. S.D.N.Y. 1983); see also, In re Sharon 

Steel Corp., 78 B.R. 762, 763 (Bankr. W.D. Pa. 1987) (Noting that the case “may be larger and 

more complex than other chapter 11 cases where the initial 120 day exclusivity period has been 

extended”). 

37. “The purpose of § 1121 is twofold. First, it allows the debtor a reasonable time to 

obtain confirmation of a plan without the threat of a competing plan. Second, it ensures creditors 

will not endure unreasonable delay after a debtor files chapter 11.” In re Mother Hubbard, Inc., 

152 B.R. 189, 195 (Bankr. W.D. Mich. 1993). Thus, section 1121 reflects a balance between the 

interests of debtors and creditors. In re GMG Capital Partners III, L.P., 503 B.R. at 600. 

38. The legislative history of section 1121 demonstrates the importance of creditors’ 

rights in bankruptcy. See, e.g., In re All Seasons Indus., Inc., 121 B.R. at 1004. The House 

Committee Reports state that the then proposed Chapter 11 “recognizes the legitimate interests of 

creditors, whose money is in the enterprise as much as the debtor’s, to have a say in the future of 

the company.” H.R. Rep. No. 595, 95th Cong., 2nd Sess., 231-32 (1978) reprinted in 1978 U.S. 

Cong. & Ad.News, 5963, 6191. As stated by the Fifth Circuit in In re Timbers of Inwood Forest 

Assoc., Ltd. 808 F.2d 363, 372 (5th Cir. 1987) (en banc) (aff’d 484 U.S. 365, 108 S.Ct. 626, 98 

L.Ed.2d 740 (1988)) (citations omitted): 

(W)e think that any bankruptcy court involved in an assessment of 

whether ‘cause’ exists should be mindful of the legislative goal 

behind Sec. 1121. The bankruptcy court must avoid reinstituting the 

imbalance between the debtor and its creditors that characterized 

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proceedings under the old Chapter XI. Section 1121 was designed, 

and should be faithfully interpreted, to limit the delay that makes 

creditors the hostages of Chapter 11 debtors. 

In 2005, a debtor’s right to extend exclusivity was further limited by the implementation of strict 

time limits on extensions. 7 Collier on Bankruptcy ⁋ 1121.11[4] (Richard Levin & Henry J. Sommer 

eds., 16th ed.). Consequently, motions to extend exclusivity “should ‘be granted neither routinely 

nor cavalierly.’” In re All Seasons Indus., Inc., 121 B.R. at 1004, quoting, In re McLean Indus., 

Inc., 87 B.R. 830, 834 (Bankr. S.D.N.Y. 1987). 

39. “Cause” is not defined in the Bankruptcy Code. In re GMG Capital Partners III, 

L.P., 503 B.R. at 600. However, many courts have considered a number of factors (the “Dow 

Test”) in determining whether cause exists, including: 

1. the size and complexity of the case; 2. the necessity of sufficient 

time to permit the debtor to negotiate a plan of reorganization and 

prepare adequate information; 3. the existence of good faith progress 

toward reorganization; 4. the fact that the debtor is paying its bills as 

they become due; 5. whether the debtor has demonstrated reasonable 

prospects for filing a viable plan; 6. whether the debtor has made 

progress in negotiations with its creditors; 7. the amount of time 

which has elapsed in the case; 8. whether the debtor is seeking an 

extension of exclusivity in order to pressure creditors to submit to the 

debtor’s reorganization demands; and 9. whether an unresolved 

contingency exists. 

In re Dow Corning Corp., 208 B.R. 661, 664-65 (Bankr. E.D. Mich. 1997); see also, Official Cmte. 

Of Unsecured Creditors v. Henry Mayo Newhall Memorial Hosp. (In re Henry Mayo Newhall 

Memorial Hosp.), 282 B.R. 444, 452 (9th Cir. BAP 2002); In re GMG Capital Partners III, L.P., 

503 B.R. at 600-01. In addition to the factors cited above, a loss of confidence in the debtor’s 

management may also be considered. In re All Seasons Indus., Inc., 121 B.R. at 1006. Not all 

factors need to be addressed. In re Dow Corning Corp., 208 B.R. at 664. 

40. Intra-bankruptcy litigation does not constitute an unresolved contingency under the 

Dow Test. In re Dow Corning Corp., 208 B.R. at 666-67. Of particular importance in this case, at 

least one court addressing mass tort claims has found that disputes surrounding the amount of tort 

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liability and the procedures for determining the amount of tort liability do not constitute unresolved 

contingencies. In re Dow Corning Corp., 208 B.R. at 666. 

41. The Ninth Circuit Bankruptcy Appellate Panel (the “BAP”) has stated that 

“affirmative answers to a number of inquiries [listed above] do not necessarily favor extending 

exclusivity. Professors Epstein, Nickles, and White have cogently debunked the propositions that 

complex cases require extended exclusivity, negotiations are facilitated by extended exclusivity, 

and pending litigation warrants extended exclusivity.” In re Henry Mayo Newall Memorial Hosp., 

282 B.R. at 452, citing, Epstein et al., § 11-15. The BAP has indicated that a paramount concern 

is whether changing the exclusivity period will advance the case. Id. at 453. 

42. The debtor has the burden of demonstrating the existence of cause. In re All Seasons 

Industries, Inc., 121 B.R. 1002, 1004 (Bankr. N.D. Ind. 1990); In re GMG Capital Partners III, 

L.P., 503 B.R. at 601. The requisite showing must be supported by the evidence. In re R.G. 

Pharmacy, Inc., 374 B.R. 484, 487 (Bankr. D. Conn. 2007). 

43. Courts may deny a motion to extend exclusivity even when cause exists. In re 

Sharon Steel Corp., 78 B.R. at 765. “This may occur where, although a company seeking 

reorganization is unusually large, the debtor has delayed in arriving at an agreement or is attempting 

to pressure other parties to yield to a position which is necessarily prejudicial.” Id.

44. There is no prejudice to the Debtors from the denial of the Motion because they will 

still have the ability to file a plan. See, e.g. In re Mother Hubbard, Inc., 152 B.R. at 195-96; see 

also, In re All Seasons Indus., Inc., 121 B.R. at 1004. “In some instances, authority to file a 

competing plan may additionally motivate the debtor to more earnestly negotiate an acceptable 

consensual plan.” In re Mother Hubbard, Inc., 152 B.R. at 195; see also, In re Henry Mayo Newhall 

Memorial Hosp., 282 B.R. at 453. Additionally, since courts maintain control over scheduling 

matters, the presence of multiple plans is not unfair to debtors. See, In re Henry Mayo Newhall 

Memorial Hosp., 282 B.R. at 453. Indeed, the presence of competing plans permits “creditors to 

cast ballots for multiple plans, [and] also encourages a chapter 11 policy of ‘creditor democracy’” 

In re Mother Hubbard, Inc., 152 B.R. at 195. 

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45. The Debtors’ main arguments in support of the Motion are that (1) the size of the 

Cases require additional time for the Debtors to have the exclusive right to file a plan, (2) the 

Debtors are not using the extension to pressure creditors, (3) the Debtors need time to resolve 

“important contingencies” (Motion at p.15), notably the wildfire claims, and (4) that the Debtors 

are current on their administrative expense obligations. None of the Debtors’ arguments justify 

extending exclusivity in the Cases. 

46. The facts of these Cases warrant denial of the Debtors’ Motion. Notwithstanding 

the size or complexity of the Cases, which the BAP has already ruled does not “necessarily favor 

extending exclusivity,” (In re Henry Mayo Newall Memorial Hosp., 282 B.R. at 452), the Cases 

were years in the making. As noted in multiple retention applications, the Debtors have been 

advised on many of the issues in the Cases for a significant period of time prior to the Petition Date. 

The Debtors have had the benefit of representation by experienced law firms on matters including 

bankruptcy, wildfire liability, insurance, and corporate governance. Thus, the size of the Cases 

should not be dispositive here. 

47. The Debtors’ argument that they are not using the bankruptcy process to pressure 

creditors is also unavailing. The inevitable result of any further delay in the plan confirmation 

process will be additional harm to tens of thousands of innocent Tort Claimants, many of whom 

are homeless, or are at risk of exhausting their insurance benefits. These creditors are harmed every 

day that they do not receive a distribution. Approximately 7,000 families will exhaust housing 

related insurance benefits during the extended exclusivity period proposed by the Debtors, and will 

be facing housing insecurity and default under their financial obligations. Many of the Tort 

Claimants will only become more vulnerable through the passage of time and will be pressured into 

accepting any form of relief, no matter how insufficient it may be. That result is at odds with the 

purpose of section 1121, which was enacted in part to remedy the imbalance from giving debtors 

too much power in the bankruptcy process. 

48. The Debtors’ position that they need more time to resolve “important 

contingencies,” including wildfire claims, is not persuasive for several reasons. First, intraCase: 19-30088 Doc# 2017 Filed: 05/15/19 Entered: 05/15/19 15:51:16 Page 19

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bankruptcy claims are not the type of claims or litigation that warrants extending the exclusivity 

period. See, e.g., In re Dow Corning Corp., 208 B.R. at 666-67 (addressing mass tort claims and 

finding that disputes surrounding the amount of tort liability and the procedures for determining 

the amount of tort liability do not constitute unresolved contingencies). Second, as noted by the 

BAP, “a likely consequence of the denial of an extension of exclusivity is ‘not that creditor plans 

will be proposed and approved, but that the threat of such plans will cause the debtor to come 

forward more quickly than he might otherwise.’” In re Henry Mayo Newall Memorial Hosp., 282 

B.R. at 453, citing, Epstein et al., § 11-15. Third, many of the wildfire claims were either resolved, 

close to resolution, or certain procedures had been negotiated to facilitate their resolution as of the 

Petition Date. The Debtors are taking another bite at the apple through the Cases. 

49. The TCC lacks knowledge regarding the Debtors’ representation that they are 

current on all of their administrative expense obligations. Nevertheless, this factor does not 

supersede all of the other factors that weigh strongly in favor of denying the Motion. 

50. The Debtors have stated very plainly that they “can give absolutely no idea when 

[they] may have a plan.” 341 Transcript 123:11-14; see also 341 Transcript 125:19-25, 126:24-25 

& 127:1-13. Given that the Debtors have had months, and factoring in pre-petition planning and 

wildfire litigation, years to consider a plan, and the real certainty of further harm to thousands of 

creditors from any extension of the exclusivity period, the TCC submits that the Motion should be 

denied. 

51. The TCC reserves the right to amend or supplement this Objection, and to wholly 

or partially join in any other objections or responses to the Motion. 

IV. NOTICE 

Notice of this statement will be provided to (i) the Debtors and their counsel; (ii) the Office 

of the United States Trustee for Region 17 (Attn: James L. Snyder, Esq. and Timothy Laffredi, 

Esq.); (iii) the UCC’s counsel; (iv) those persons who have formally appeared in these Chapter 11 

Cases and requested service pursuant to Bankruptcy Rule 2002; and (v) all the Standard Parties, as 

defined in the Court’s Second Amended* Order Implementing Certain Notice and Case 

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Management Procedures entered on May 14, 2019 [Doc. No. 1996]. The TCC respectfully submits 

that no further notice is required. 

WHEREFORE the TCC respectfully requests that the Court: (a) deny the Motion; and (b) 

grant such other and further relief as the Court may deem just and appropriate. 

Dated: May 15, 2019 

BAKER & HOSTETLER LLP 

By: /s/ Cecily A. Dumas 

 Cecily A. Dumas 

Attorneys for The Official Committee of Tort 

Claimants 

Elyssa S. Kates 

Jason Blanchard 

BAKER & HOSTETLER LLP 

45 Rockefeller Plaza 

New York, NY 10111 

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