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WEIL, GOTSHAL & MANGES LLP 

Stephen Karotkin (pro hac vice) 

(stephen.karotkin@weil.com) 

Ray C. Schrock, P.C. (pro hac vice) 

(ray.schrock@weil.com) 

Jessica Liou (pro hac vice) 

(jessica.liou@weil.com) 

Matthew Goren (pro hac vice) 

(matthew.goren@weil.com) 

767 Fifth Avenue 

New York, NY 10153-0119 

Tel: 212 310 8000 

Fax: 212 310 8007 

KELLER & BENVENUTTI LLP 

Tobias S. Keller (#151445) 

(tkeller@kellerbenvenutti.com) 

Jane Kim (#298192) 

(jkim@kellerbenvenutti.com) 

650 California Street, Suite 1900 

San Francisco, CA 94108 

Tel: 415 496 6723 

Fax: 650 636 9251 

Attorneys for Debtors and Debtors in Possession 

UNITED STATES BANKRUPTCY COURT 

NORTHERN DISTRICT OF CALIFORNIA 

SAN FRANCISCO DIVISION 

In re: 

PG&E CORPORATION,

 - and -

PACIFIC GAS AND ELECTRIC 

COMPANY,

Bankruptcy Case No. 19-30088 (DM)

Chapter 11 (Lead Case) (Jointly Administered) 

SEVENTH OMNIBUS MOTION OF THE UTILITY 

PURSUANT TO 11 U.S.C § 365(a), FED. R. BANKR. P. 

6006, AND B.L.R. 6006-1 FOR AN ORDER 

APPROVING ASSUMPTION OF CERTAIN REAL 

PROPERTY LEASES 

(“SECOND LEASE ASSUMPTION MOTION”) 

Date: November 19, 2019 

Time: 10:00 a.m. (Pacific Time) 

Place: United States Bankruptcy Court 

 Courtroom 17, 16th Floor 

 San Francisco, CA 94102 

Objection Deadline: November 5, 2019, 

 4:00 p.m. (Pacific Time) 

 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). 

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NOTICE TO COUNTERPARTIES 

This Motion seeks to assume certain leases. A list of the Real Property Leases (as defined 

below) sought to be assumed pursuant to this Motion is annexed hereto as Exhibit B. If you 

have received this Motion and are a counterparty to a lease with Pacific Gas and Electric 

Company, please review Exhibit B to determine if this Motion affects your lease and your 

rights thereunder.

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”), hereby submit this Motion (the “Motion”), 

pursuant to section 365(a) of title 11 of the United States Code (the “Bankruptcy Code”), Rule 6006 of 

the Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”), and Rule 6006-1 of the 

Bankruptcy Local Rules for the United States District Court for the Northern District of California 

(the “Bankruptcy Local Rules”), for an order (i) approving the Utility’s assumption of the Real 

Property Leases (as defined below), (ii) authorizing the Utility to make Cure Payments (as defined 

below) totaling $6,806.26 in connection with the Real Property Leases, (iii) following such payments 

and the removal of the Liens (as defined below) asserted on the underlying properties associated with 

the Real Property Leases, barring the lessors from asserting that any default exists under the Real 

Property Leases, and (iv) granting related relief. 

In support of the Motion, the Utility submits the Declaration of Andrew K. Williams, the 

“Williams Declaration”) filed contemporaneously herewith. A proposed form of order granting the 

relief requested herein is annexed hereto as Exhibit A (the “Proposed Order”). 

MEMORANDUM OF POINTS AND AUTHORITIES 

I. JURISDICTION 

The Court has jurisdiction to consider this matter pursuant to 28 U.S.C. §§ 157 and 1334, 

the Order Referring Bankruptcy Cases and Proceedings to Bankruptcy Judges, General Order 24 (N.D. 

Cal. Feb. 22, 2016), and Rule 5011-1(a) of the Bankruptcy Local Rules. This is a core proceeding 

pursuant to 28 U.S.C. § 157(b). Venue is proper before the Court pursuant to 28 U.S.C. §§ 1408 and 

1409. 

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II. BACKGROUND 

On January 29, 2019 (the “Petition Date”), the Debtors commenced with the Court 

voluntary cases under chapter 11 of the Bankruptcy Code. The Debtors continue to operate their 

businesses and manage their properties as debtors in possession pursuant to sections 1107(a) and 1108 

of the Bankruptcy Code. No chapter 11 trustee or examiner has been appointed in either of the Chapter 

11 Cases. The Debtors’ Chapter 11 Cases are being jointly administered for procedural purposes only 

pursuant to Bankruptcy Rule 1015(b). 

On February 12, 2019, the United States Trustee (the “U.S. Trustee”) appointed an 

Official Committee of Unsecured Creditors (the “Creditors Committee”). On February 15, 2019, the 

U.S. Trustee appointed an Official Committee of Tort Claimants (the “Tort Claimants Committee” 

and, together with the Creditors Committee, the “Committees”). 

Additional information regarding the circumstances leading to the commencement of the 

Chapter 11 Cases and information regarding the Debtors’ businesses and capital structure is set forth in 

the Amended Declaration of Jason P. Wells in Support of First Day Motions and Related Relief [Docket 

No. 263] (the “Wells Declaration”). 

III. THE REAL PROPERTY LEASES 

The Debtors are party to numerous real property leases, which are used by the Debtors in 

connection with their ongoing business operations. The Debtors received two extensions of the deadline 

to assume or reject a number of their nonresidential real property leases by the Order Pursuant to 11 

U.S.C. Sections 365(d)(4) and B.L.R.6006-1 Extending Time to Assume or Reject Unexpired Leases of 

Nonresidential Real Property [Docket No. 2227] and Order Pursuant to 11 U.S.C. §§ 365(d)(4) and 

B.L.R. 6006-1 Further Extending Time to Assume or Reject Unexpired Leases of Nonresidential Real 

Property [Docket No. 3749]. For the Real Property Leases herein, the Utility received an extension of 

the deadline to assume or reject such leases until November 30, 2019. 

By this Motion, the Utility seeks to assume (i) that certain Amended and Restated Ground 

Sublease, dated January 15, 2008, originally between Enerland, LLC, as sublessor, and E & L Westcoast, 

LLC, as sublessee, and subsequently assigned to the Utility, as sublessee, for certain real property 

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located in the County of Colusa, California (the “Enerland Lease”); and (ii) that certain Lease, dated 

March 24, 1988, as subsequently amended, between the Utility and PGE Starpoint, LLC, and several 

other entities as tenants in common, for the real property located at 650 "O" Street and 705 "P" Street, 

Fresno, California 93763 (the “Starpoint Lease,” and together with the Enerland Lease, the “Real 

Property Leases”). 

A schedule of the Real Property Leases (including the details of all counterparties, 

amendments and assignments), along with any Cure Payments to be made in connection with the 

assumption is set forth on Exhibit B to this Motion. 

As further discussed below, the Utility has determined that assumption is in the best 

interest of the Utility and its estate. If the Utility is not granted authority to assume the Real Property 

Leases, to the extent such leases are unexpired leases of nonresidential real property, section 

365(d)(4)(A) of the Bankruptcy Code provides that the Real Property Leases will be deemed rejected, 

and the Utility will be obligated to immediately surrender the properties subject to such Real Property 

Leases (the “Leased Properties”) to the respective lessors. 

A. Enerland Lease 

Pursuant to the Enerland Lease, the Utility subleases approximately one hundred (100) 

acres of land in Colusa County, California (the “Enerland Property”) for a forty-eight-year term, 

expiring in 2052. On the Enerland Property, the Utility has constructed and operates the Colusa 

Generating Station, a 657-megawatt natural gas-powered electric generating facility. The Colusa 

Generating Station provides safe and reliable energy to meet the needs of more than half-a-million Utility 

customers and is among the cleanest natural-gas-fueled power plants in California. 

Assumption of the Enerland Lease will allow the Utility to continue to operate the Colusa 

Generating Station, which provides a significant amount of generation capacity—over 8% of the Utility’s 

total net operating capacity of its owned generation facilities—to meet the electricity demands of the 

Utility’s customers. Deemed rejection of the Enerland Lease would result in the Enerland Property 

reverting to the counterparty to the Enerland Lease, and would result in the loss of a substantial amount 

of capital investment by the Utility and seriously compromise the Utility’s ability to access sufficient 

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generation capacity to meet the needs of its customers. 

B. Starpoint Lease 

The Starpoint Lease (the “Starpoint Property”) covers the Utility’s Fresno Regional 

Office. The site is utilized by the Utility’s customer care, information technology, gas operations, and 

electric operations teams, comprising over 500 employees. In addition, the Utility operates a customer 

service office at the site, which it does not have the regulatory authority to close. 

The Utility believes that the current rent for the Starpoint Property is approximately at 

market rate, and the Utility considers the Starpoint Lease to contain other favorable terms. Furthermore, 

pursuant to the terms of the Starpoint Lease, the Utility has the option, which expires on November 30, 

2019, to extend the term of the lease by five (5) years on commercially favorable terms. The Utility 

wishes to exercise this option, but will only do so following the approval of assumption, to avoid 

increasing the quantum of rejection damages if assumption is not authorized. 

If the Utility is unable to assume the Starpoint Lease, it would be costly, disruptive and 

likely impractical to relocate the Fresno Regional Office within the Fresno area. In particular, the cost 

and time associated with relocating the information technology infrastructure the Utility has installed at 

the Starpoint Property would be significant. The Utility expects that the lease of an alternative location, 

if a suitable site could even be located in the Fresno area, would be on less favorable terms than those of 

the Starpoint Lease. 

C. Alternatives to Assumption 

To the extent that any rental savings could be achieved by rejecting either of the Real 

Property Leases and acquiring new property—or obtaining new leases in their place—the Utility believes 

that such savings would be immaterial and would be outweighed by the costs of rejection, including 

(a) the expenses that the Utility would incur in moving its equipment and fixtures to new locations, 

(b) the time, cost, and difficulty of finding replacement leases, (c) the adverse impact and interruption to 

the Utility’s business operations unless and until the Utility is able to negotiate new leases, and (d) the 

potential claims for damages arising from the rejection the Real Property Leases. 

Absent the relief sought by this Motion, if the Real Property Leases are deemed rejected, 

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the Utility could face numerous adverse consequences from such deemed rejection, as outlined above. 

Moreover, the Utility and its estate will be deprived of the benefit of the opportunity to realize any 

potential value from a subsequent assignment of the Real Property Leases if the Utility determines in the 

future it no longer has a business use for such leases. 

IV. RELIEF REQUESTED 

 The Utility seeks an order (i) approving the assumption of the Real Property Leases 

under section 365(a) of the Bankruptcy Code, (ii) authorizing the cure payments to the lessors of the 

Real Property Leases (the “Lessors”) as set out in Exhibit B to this Motion (the “Cure Payments”), 

and (iii) barring the Lessors from, following payment of the Cure Payments and the removal of the 

Liens (defined below), asserting that any default exists under the Real Property Leases as of the date of 

the entry of an order on this Motion. 

V. BASIS FOR RELIEF REQUESTED 

The Utility’s assumption of the Real Property Leases should be approved under section 

365(a) of the Bankruptcy Code. Section 365(a) of the Bankruptcy Code provides, in pertinent part, that 

a debtor in possession, “subject to the court’s approval, may assume or reject any executory contract or 

unexpired lease of the debtor.” 11 U.S.C. § 365(a). As an initial matter, each of the Real Property Leases 

is unexpired, and therefore is capable of being assumed under section 365(a). Diatom LLC v. Comm. of 

Creditors Holding Unsecured Claims (In re Gentile Family Indus.), No. BAP CC-13-1563-KITAD, 

2014 WL 4091001, at *3 (B.A.P. 9th Cir. Aug. 19, 2014). 

Bankruptcy Courts generally “approve motions to assume, assume and assign, or reject 

executory contracts or unexpired leases upon a showing that the debtor’s decision to take such action 

will benefit the debtor’s estate and is an exercise of sound business judgment.” In re MF Glob. Holdings 

Ltd., 466 B.R. 239, 242 (Bankr. S.D.N.Y. 2012); see also Durkin v. Benedor Corp. (In re G.I. Indus., 

Inc.), 204 F.3d 1276, 1282 (9th Cir. 2000); In re Miller, No. 15-61159-12, 2016 WL 1316763, at *4 

(Bankr. D. Mont. Apr. 1, 2016). 

The “business judgment” standard is not a strict standard; it requires only a showing that 

either assumption or rejection of the unexpired lease will benefit the debtor’s estate. See Pac. Shores 

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Dev., LLC v. At Home Corp. (In re At Home Corp.), 292 B.R. 195, 199 (N.D. Cal. 2003), aff'd, 392 F.3d 

1064 (9th Cir. 2004) (“Bankruptcy courts generally approve rejection if the debtor demonstrates that the 

rejection will benefit the estate under a ‘business judgment’ test.”); In re Am. Suzuki Motor Corp., 494 

B.R. 466, 475 n.4 (Bankr. C.D. Cal. 2013). Furthermore, “[c]ourts generally will not second-guess a 

debtor’s business judgment concerning whether the assumption or rejection of an executory contract or 

unexpired lease would benefit the debtor’s estate.” In re MF Glob. Holdings Ltd., 466 B.R. at 242; In 

re Miller, 2016 WL 1316763, at *4 (“Although . . . business judgment is the proper standard for 

determining whether to permit assumption or rejection of an executory contract or unexpired lease, the 

court should focus on the business judgment of the trustee or debtor in possession, not on its own business 

judgment.”). The Court should “presume that the debtor-in-possession acted prudently, on an informed 

basis, in good faith, and in the honest belief that the action taken was in the best interests of the 

bankruptcy estate.” Agarwal v. Pomona Valley Med. Grp., Inc. (In re Pomona Valley Med. Grp., Inc.), 

476 F.3d 665, 670 (9th Cir. 2007) (in the context of a motion to reject under section 365(a)). Only a 

decision which is “so manifestly unreasonable that it could not be based on sound business judgment, 

but only on bad faith, or whim or caprice” runs afoul of the rule. Id. 

As discussed above and in the Williams Declaration, the Utility seeks to assume the Real 

Property Leases to avoid any disruption to its business operations. The Utility considers the Real 

Property Leases to contain more favorable terms than those that would be obtained in replacement leases, 

if suitable replacement properties could be located to rent. Assumption of the Real Property Leases will 

also avoid the costs arising from relocation, decommissioning, and rejection damages if the Real 

Property Leases are deemed rejected. 

When assuming an unexpired lease or executory contract, section 365(b) of the 

Bankruptcy Code requires the debtor to cure any defaults under the contract or lease and provide 

adequate assurance that it will promptly cure these defaults, and provide adequate assurance of future 

performance under the contract or lease. See 11 U.S.C. § 365(b)(1)(A)-(C); see also In re Crummie, 194 

B.R. 230, 237 (Bankr. N.D. Cal. 1996); In re Heitman, No. 99-20559, 1999 WL 33486720, at *1 (Bankr. 

D. Idaho July 22, 1999) (“Additionally, § 365(a) and (b) require Court approval of assumption, and only 

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then upon proof of satisfaction of certain prerequisites regarding cure of defaults and adequate assurance 

of future performance.”). 

The Utility has reviewed its books and records in respect of the Real Property Leases and 

has attempted to identify any prepetition defaults requiring cure under section 365(b) of the Bankruptcy 

Code. Where the Utility has identified such defaults, it has calculated a monetary amount to satisfy the 

defaults, which amounts are listed in Exhibit B. In addition to this, in some circumstances, the Utility 

is obligated under the terms of the Real Property Leases to remove liens that have been placed on the 

Leased Properties by third parties (the “Liens”). Where the Utility has identified a Lien on a Leased 

Property, such Lien is reflected in Exhibit B. 

The Utility seeks authorization to make the Cure Payments to the applicable Lessors, and 

to remove the Liens in accordance with the authority previously granted to the Utility in the Final Order 

Pursuant to 11 U.S.C. Sections 105(a), 363(b), and 503(b) and Fed. R. Bankr. P. 6003 and 6004 (i) 

Authorizing the Debtors to Pay Prepetition Obligations Owed to Shippers, Warehousemen, and Other 

Lien Claimants, and (ii) Granting Administrative Expense Priority Status for Claims Arising from Goods 

Delivered to the Debtors Postpetition dated February 28, 2019 [Docket No. 697] (the “Lien Order”) by 

making any necessary payments to the holders of Liens. The Utility seeks under this Motion to, 

following the making of the Cure Payments and the removal of any Liens, forever bar, estop, and 

permanently enjoin the Lessors from asserting against the Utility, its successors or assigns, or the 

property of any of them, any default existing under Real Property Leases as of the date of the entry of 

the order on this Motion. 

With respect to adequate assurance of future performance, the Utility has sufficient 

financial capacity to meet its obligations under the Real Property Leases, including through the Debtors’ 

access to the $5.5 billion debtor-in-possession financing facility approved by the Bankruptcy Court, 

which was intended to satisfy the Debtors’ liquidity needs through December 2020. See Declaration of 

David Kurtz In Support of Debtors’ Motion Pursuant to 11 U.S.C. §§ 105, 362, 363, 364, 503 and 507 

and Fed. R. Bankr. P. 2002, 4001, 6003, 6004 and 9014 for Interim and Final Orders (i) Authorizing 

the Debtors to Obtain Senior Secured, Superpriority, Postpetition Financing, (ii) Granting Liens and 

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Superpriority Claims, (iii) Modifying the Automatic Stay, (iv) Scheduling Final Hearing and 

(v) Granting Related Relief [Docket No. 24]. The Utility further believes that there is adequate assurance 

of future performance under the Real Property Leases in light of the Utility’s history of timely payments 

and timely performance of obligations thereunder during the Chapter 11 Cases. 

Where required by section 365(d)(3) of the Bankruptcy Code to the Utility’s knowledge, 

the Utility has timely performed its postpetition obligations under the Real Property Leases and has 

remained current on such obligations since the Petition Date. The Utility’s history of meeting such 

obligations under the Real Property Leases during these Chapter 11 Cases evidences the ability to 

continue to do so in the future. Consequently, the Utility submits that no further showing of adequate 

assurance of future performance is necessary. 

VI. RESERVATION OF RIGHTS 

Nothing in this Motion is intended to impair, prejudice, waive or otherwise affect the 

rights of the Utility and its estate to subsequently assign any of the Real Property Leases pursuant to, 

and in accordance with, the requirements of section 365 of the Bankruptcy Code. 

VII. NOTICE 

Notice of this Motion will be provided to (i) the Office of the United States Trustee for 

Region 17 (Attn: Andrew Vara, Esq. and Timothy Laffredi, Esq.); (ii) counsel to the Creditors 

Committee; (iii) counsel to the Tort Claimants Committee; (iv) the Securities and Exchange 

Commission; (v) the Internal Revenue Service; (vi) the Office of the California Attorney General; 

(vii) the California Public Utilities Commission; (viii) the Nuclear Regulatory Commission; (ix) the 

Federal Energy Regulatory Commission; (x) the Office of the United States Attorney for the Northern 

District of California; (xi) counsel for the agent under the Debtors’ debtor in possession financing 

facility; (xii) the non-debtor parties to the Real Property Leases; and (xiii) those persons who have 

formally appeared in these Chapter 11 Cases and requested service pursuant to Bankruptcy Rule 2002. 

The Utility respectfully submits that no further notice is required. 

The Debtors have previously sought relief from this Court to assume certain executory 

contracts and unexpired leases. No previous request for the relief sought herein to assume the Real 

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Property Leases has been made by the Debtors to this or any other court. 

 

WHEREFORE the Utility respectfully requests entry of an order granting (i) the relief 

requested herein as a sound exercise of the Utility’s business judgment and in the best interests of its 

estate, creditors, shareholders, and all other parties in interest, and (ii) such other and further relief as the 

Court may deem just and appropriate. 

Dated: October 22, 2019 

WEIL, GOTSHAL & MANGES LLP 

KELLER & BENVENUTTI LLP 

By: /s/ Jessica Liou __________________

 Jessica Liou 

Attorneys for Debtors 

and Debtors in Possession 

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