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OBJECTION AND JOINDER 19-30088 (DM) 

25936711

Rebecca Weissman (No. 322402)

DECHERT LLP 

One Bush Street, Suite 1600 

San Francisco, California 94104 

Telephone: 415.262.4500 

Facsimile: 415.262.4555 

rebecca.weissman@dechert.com 

Allan S. Brilliant (pro hac vice) 

Shmuel Vasser (pro hac vice) 

Alaina R. Heine (pro hac vice) 

DECHERT LLP 

1095 Avenue of the Americas 

New York, New York 10036 

Telephone: 212.698.3500 

Facsimile: 415.698.3599 

allan.brilliant@dechert.com 

shmuel.vasser@dechert.com 

alaina.heine@dechert.com 

Attorneys for State Farm Mutual Automobile Insurance 

Company and its affiliates and subsidiaries

UNITED STATES BANKRUPTCY COURT 

NORTHERN DISTRICT OF CALIFORNIA 

SAN FRANCISCO DIVISION 

In re:

PG&E CORPORATION and PACIFIC 

GAS & ELECTRIC COMPANY, 

 Debtors. 

□ Affects PG&E Corporation 

□ Affects Pacific Gas and 

Electric Company 

x Affects both Debtors 

* All papers shall be filed in the Lead 

Case, No. 19-30088 (DM).

Case No. 19-30088 (DM)

Chapter 11 

Jointly Administered 

OBJECTION AND JOINDER TO THE 

AD HOC GROUP OF SUBROGATION 

CLAIM HOLDERS’ OBJECTION TO 

DEBTORS’ MOTION PURSUANT TO 11 

U.S.C. §§ 105(a) AND 502(c) FOR THE 

ESTABLISHMENT OF WILDFIRE CLAIMS 

ESTIMATION PROCEDURES 

Hearing Date and Time: August 14, 2019 at 9:30 

a.m. (PT) 

Hearing Location: 450 Golden Gate Ave., San 

Francisco, CA, Courtroom 17 

Judge: Hon. Dennis Montali 

Related Docket Nos: 3091, 3419 

Case: 19-30088 Doc# 3426 Filed: 08/07/19 Entered: 08/07/19 15:07:44 Page 1 of

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OBJECTION AND JOINDER 19-30088 (DM) 

25936711

State Farm Mutual Automobile Insurance Company and its affiliates and subsidiaries 

(collectively, “State Farm”), as creditors and parties in interest in the above-captioned chapter 11 

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

together with the Utility, the “Debtors”), by and through its undersigned counsel, hereby file this 

objection (the “Objection”) to the Debtors’ Motion Pursuant to 11 U.S.C. §§ 105(a) and 502(c) 

for the Establishment of Wildfire Claims Estimation Procedures [ECF No. 3091] (the “Estimation 

Motion”),1 and joinder (the “Joinder”) to the Ad Hoc Group of Subrogation Claim Holders’ 

Objection to Debtors’ Motion Pursuant to 11 U.S.C. §§ 105(a) and 502(c) for the Establishment 

of Wildfire Claims Estimation Procedures (the “Subrogation Group Objection”) [ECF No. 3419]. 

In support of the Objection and Joinder, State Farm respectfully sets forth and represents as 

follows: 

OBJECTION AND JOINDER 

State Farm is one of the largest property and casualty insurers in the State of California. 

State Farm is believed to be the insurer holding the most insurance subrogation claims against the 

Debtors. State Farm is a member of the Ad Hoc Group of Subrogation Claim Holders (the 

“Subrogation Group”). State Farm’s claims are in the billions of dollars.2

Background 

On July 3, 2019, the Subrogation Group filed the Motion of the Ad Hoc Group of 

Subrogation Claim Holders for Relief from the Automatic Stay (the “Subrogation Group Lift Stay 

Motion”) [ECF No. 2863]. On July 15, 2019, State Farm filed the Joinder to the Motion of the 

Ad Hoc Group of Subrogation Claim Holders for Relief from the Automatic Stay (the “State Farm 

1

 Each capitalized term used but not defined herein shall have the meaning ascribed to it in Estimation Motion. 

2

 Third Amended Verified Statement of the Ad Hoc Group of Subrogation Claim Holders Pursuant to Bankruptcy 

Rule 2019 [ECF No. 3020].

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Lift Stay Joinder”) [ECF No. 2983]. 

On July 18, 2019 the Debtors filed the Estimation Motion. The Estimation Motion 

requests that the Court consider issues related to the 2015, 2017, and 2018 Northern California 

Wildfires, including the Tubbs Fire (collectively, the “Wildfire Claims”), in three separate phases. 

On July 24, 2019, this Court held a hearing and adjourned the Subrogation Group Lift 

Stay Motion, the State Farm Lift Stay Motion, and the Estimation Motion to be heard collectively 

on August 14, 2019. 

Objection 

State Farm files this Objection because the Estimation Motion will not advance these 

chapter 11 cases, but instead will waste this Court’s and the parties’ valuable time and resources. 

In the Estimation Motion, the Debtors seek to estimate the Wildfire Claims only for voting and 

plan feasibility, but fail to explain how an estimation process for these purposes would actually 

advance any of these goals. See Estimation Motion at 15. 

Voting Issues will not be Advanced 

While the Debtors argue that the estimation of Wildfire Claims is for voting purposes, the 

Estimation Motion provides no details as to the Debtors’ approach on voting in these cases. Id.

Under sections 502(a) and 502(b) of the Bankruptcy Code, claims filed under section 501 are 

deemed allowed unless objected to, and therefore would be entitled to vote to accept or reject any 

eventual plan of reorganization. 11 U.S.C. §§ 502(a), (b). Debtors in the past have used 

estimation for purposes of voting, In re Trident Shipworks, Inc., 247 B.R. 513, 514-15 (Bankr. 

M.D. Fla. 2000), but the Debtors here have not indicated how the individually filed claims will be 

counted for voting purposes under section 1122 of the Bankruptcy Code, in light of the aggregate 

estimation of Wildfire Claims proposed by the Debtors. Accordingly, the Debtors have failed to 

establish that estimation for voting purposes will advance these cases in any material way. 

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Feasibility Issues will not be Advanced 

The Estimation Motion also does not adequately address feasibility, and therefore, will not 

advance these chapter 11 cases. Feasibility is a critical element of the confirmation of any plan 

under the Bankruptcy Code by requiring a plan proponent to demonstrate to the court that the 

debtor will be able to pay its creditors in accordance with the plan of reorganization without risk 

of a subsequent liquidation or further financial reorganization. See Matter of Pizza of Hawaii, 

Inc., 761 F.2d 1374, 1382 (9th Cir. 1985) (“‘The purpose of section 1129(a)(11) is to prevent 

confirmation of visionary schemes which promise creditors and equity security holders more 

under a proposed plan than the debtor can possibly attain after confirmation.’”) (quoting 

5 COLLIER ON BANKRUPTCY ¶ 1129.02[11] at 1129–34 (15th ed. 1984)); 11 U.S.C. § 1129(a)(11) 

(“Confirmation of the plan is not likely to be followed by the liquidation, or the need for further 

financial reorganization, of the debtor or any successor to the debtor under the plan, unless such 

liquidation or reorganization is proposed in the plan.”). 

Accordingly, when a bankruptcy court estimates unliquidated claims for feasibility 

purposes, it is establishing a value that the debtor is expected to pay as part of its plan of 

reorganization. See Matter of Pizza of Hawaii, 761 F.2d at 1382 (remanding the case to the 

bankruptcy court to estimate a claim that, at minimum would constitute a fourth of the debtor’s 

cash disbursements under the plan, and indicating that without an estimation, the plan was not 

feasible); In re North American Health Care, Inc., 544 B.R. 684, 689-90 (Bankr. C.D. Cal. 2016) 

(finding that the court could estimate claims in the aggregate for plan confirmation purposes “so 

that [the debtors] can craft a plan of reorganization calculated to satisfy the all-important plan 

feasibility requirement”). 

But for the estimation proceedings to truly address feasibility, the estimation of the 

Wildfire Claims must set a value, or a cap on these claims, so that the Debtors can prove that they 

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meet these obligations as part of the feasibility analysis. See, e.g., In re Roman Catholic 

Archbishop of Portland in Or., 339 B.R. 215, 219-221 (Bankr. D. Or. 2006) (finding that an 

estimation that would create a limited fund to pay the tort claims could significantly affect 

distribution). In the Estimation Motion, however, the Debtors assert that the estimation is not 

being proposed for distribution purposes, see Estimation Motion at 15, and remain vague as to 

their intentions in the objection to the Ad Hoc Group of Subrogation Claim Holders’ motion to 

terminate exclusivity by expressing their plan to satisfy “all wildfire claims in amounts agreed 

upon or as otherwise authorized or allowed by this Court.” See Debtors’ Objection to Motion of 

Ad Hoc Group of Subrogation Claim Holders to Terminate Exclusive Periods pursuant to Section 

112(d) of the Bankruptcy Code [ECF No. 3388 at p. 9] (emphasis added). The absence of 

reference to the estimated amount of wildfire claims is conspicuous. Thus, proceeding with 

estimation in this fashion will be an irrelevant, burdensome and unnecessary exercise, which will 

only serve to waste this Court’s valuable resources. 

Joinder 

In addition to its individual objection, State Farm joins the Subrogation Group Objection 

and agrees that (i) the Debtors’ Estimation Motion is fundamentally at odds with the purposes and 

goals of the estimation process; (ii) the procedures proposed in the Estimation Motion would 

compel this Court to improperly estimate claims under Section 502(c) before claims are required 

to be filed, thereby creating an unnecessary appellate risk; (iii) this Court must apply inverse 

condemnation as it has been established by the California Court of Appeals because the Debtors 

have not provided any “convincing” evidence that the California Supreme Court would reverse 

the California Appellate Court decisions; (iv) determining the constitutionality of California’s 

inverse condemnation law would exceed the bankruptcy court’s role in an estimation proceeding; 

(v) this Court should not use the estimation process to determine that certain complex and multiCase: 19-30088 Doc# 3426 Filed: 08/07/19 Entered: 08/07/19 15:07:44 Page 5 of

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billion dollar claims, which caused the Debtors to enter bankruptcy, have no value; (vi) it would 

be inefficient to estimate the Tubbs claims and then separately estimate the other wildfire claims 

months later; (vii) this Court should allow a bellwether Tubbs trial to proceed in parallel to an 

estimation proceeding, which would provide a crucial data point for determining the value of 

Tubbs claims in any estimation or settlement process; and (viii) this Court should order the 

Debtors, the Official Committee of Tort Claimants, and the Subrogation Group to meet and 

confer to create a single estimation process, which would be more efficient and less cumbersome 

than the Debtors’ current estimation procedures without implicating any constitutional concerns. 

For the reasons stated herein, State Farm objects to the Debtors’ Estimation Motion as 

well as joins in the Subrogation Group Objection. 

RESERVATION OF RIGHTS

State Farm reserves the right to raise further and other objections to the Debtors’ 

Estimation Motion at the hearing as may be necessary or appropriate. 

DATED: August 7, 2019 

/s/ Shmuel Vasser

Allan S. Brilliant (pro hac vice) 

Shmuel Vasser (pro hac vice) 

Alaina R. Heine (pro hac vice) 

DECHERT LLP 

1095 Avenue of the Americas 

New York, New York 10036 

-andRebecca Weissman (No. 322402) 

DECHERT LLP 

One Bush Street, Suite 1600 

San Francisco, California 94104 

Attorneys for State Farm Mutual Automobile 

Insurance Company and its affiliates and 

subsidiaries

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