1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

BAKER & HOSTETLER LLP

Robert A. Julian (SBN 88469) 

Cecily A. Dumas (SBN 111449) 

160 Battery Street, Suite 100 

San Francisco, CA 94111

Telephone: (628) 208-6434

Facsimile: (310) 820-8859

Email: rjulian@bakerlaw.com

cdumas@bakerlaw.com

Eric E. Sagerman (SBN 155496) 

Lauren T. Attard (SBN 320898) 

11601 Wilshire Boulevard

 Suite 1400 

 Los Angeles, CA 90025 

Telephone: (310) 820-8800

Facsimile: (310) 820-8859

Email: esagerman@bakerlaw.com

lattard@bakerlaw.com

Counsel to the Official Committee of Tort 

Claimants 

AKIN GUMP STRAUSS HAUER & FELD LLP

Michael S. Stamer (pro hac vice) 

Ira S. Dizengoff (pro hac vice) 

David H. Botter (pro hac vice) 

Abid Qureshi (pro hac vice) 

One Bryant Park

New York, New York 10036

Telephone: (212) 872-1000 

Facsimile: (212) 872-1002 

Email: mstamer@akingump.com

idizengoff@akingump.com 

dbotter@akingump.com 

aqureshi@akingump.com 

Ashley Vinson Crawford (SBN 257246) 

580 California Street 

Suite 1500 

San Francisco, CA 94104 

Telephone: (415) 765-9500 

Facsimile: (415) 765-9501 

Email: avcrawford@akingump.com 

Counsel to the Ad Hoc Committee of Senior 

Unsecured Noteholders of Pacific Gas and 

Electric Company 

UNITED STATES BANKRUPTCY COURT

NORTHERN DISTRICT OF CALIFORNIA

SAN FRANCISCO DIVISION

In re:

PG&E CORPORATION,

-andPACIFIC GAS AND ELECTRIC 

COMPANY,

Bankruptcy Case

No. 19-30088 (DM) 

Chapter 11

(Lead Case)

(Jointly Administered)

JOINT MOTION OF THE OFFICIAL 

COMMITTEE OF TORT CLAIMANTS AND 

AD HOC COMMITTEE OF SENIOR 

UNSECURED NOTEHOLDERS TO 

TERMINATE THE DEBTORS’ 

EXCLUSIVE PERIODS PURSUANT TO 

SECTION 1121(d)(1) OF THE 

BANKRUPTCY CODE

DEBTORS

Case: 19-30088 Doc# 3940 Filed: 09/19/19 Entered: 09/19/19 14:03:36 Page 1 of

16
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

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).

Hearing

Date: September 24, 2019, or to be determined

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

Place: Courtroom 17 

450 Golden Gate Ave, 16th Floor 

San Francisco, CA 94102 

Objection Deadline: Parties intend to move for 

shortened time to have this Motion heard on 

September 24, 2019 with an objection deadline to 

be set by the Court.

Case: 19-30088 Doc# 3940 Filed: 09/19/19 Entered: 09/19/19 14:03:36 Page 2 of

16
 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

TABLE OF CONTENTS

Page 

PRELIMINARY STATEMENT ......................................................................................... 5

JURISDICTION AND VENUE ........................................................................................ 8

BACKGROUND ............................................................................................................... 8

RELIEF REQUESTED...................................................................................................... 9

BASIS FOR RELIEF......................................................................................................... 9

CONCLUSION................................................................................................................15

NOTICE........................................................................................................................... 15

Case: 19-30088 Doc# 3940 Filed: 09/19/19 Entered: 09/19/19 14:03:36 Page 3 of

16
 

4 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

TABLE OF AUTHORITIES

 Page(s) 

Cases

In re Adelphia Commc’ns Corp., 

352 B.R. 578 (Bankr. S.D.N.Y. 2006) ................................................................................................ 8 

Chandler v. State Farm Mut. Auto Ins. Co., 

598 F.3d 1115 (9th Cir. 2010) .......................................................................................................... 14

In re Dow Corning Corp., 

208 B.R. 661 (Bankr. E.D. Mich. 1997) ............................................................................................. 8 

In re L&J Anaheim Assocs., 

995 F.2d 940 (9th Cir. 1993) ............................................................................................................ 13 

Statutes

28 U.S. C. § 157 ........................................................................................................................................ 8

28 U.S. C. § 1334 ...................................................................................................................................... 8

28 U.S.C. § 1408 ....................................................................................................................................... 8

28 U.S.C. § 1409 ....................................................................................................................................... 8

United States Code title 11 ................................................................................................. 5, 8, 10, 13, 14

Other Authorities

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

California Rule 5011-1(a) ................................................................................................................... 8

Bankruptcy Rule 2002 ............................................................................................................................ 15

Federal Rules of Bankruptcy Procedure Rule 2019 .................................................................................. 5

Mark Chediak and Scott Deveau, PG&E’s $11 Billion Settlement with Insurers Sets up 

Clash with Fire Victims, Los Angeles Times (Sept. 13, 2019)......................................................... 13

Order Referring Bankruptcy Cases and Proceedings to Bankruptcy Judges, General 

Order 24 .............................................................................................................................................. 8

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

Pursuant to Bankruptcy Rule 2019 [Docket No. 3020], Exhibit A .................................................. 12

Case: 19-30088 Doc# 3940 Filed: 09/19/19 Entered: 09/19/19 14:03:36 Page 4 of

16
 

5 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

The Official Committee of Tort Claimants (the “TCC”) and the Ad Hoc Committee of Senior 

Unsecured Noteholders of Pacific Gas and Electric Company (the “Ad Hoc Committee”)1 in the abovecaptioned 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 their respective undersigned counsel, Baker 

& Hostetler LLP and Akin Gump Strauss Hauer & Feld LLP, hereby submit this motion (the “Motion”) 

pursuant to section 1121(d)(1) of title 11 of the United States Code (the “Bankruptcy Code”) for entry 

of an order, substantially in the form attached as Exhibit A hereto, terminating the Debtors’ exclusive 

periods to file and solicit acceptances of a plan of reorganization (the “Exclusive Periods”). Termination 

would allow the TCC and the Ad Hoc Committee to jointly propose the Alternative Plan (as defined 

herein) attached hereto as Exhibit 1. In support of this Motion, the TCC and the Ad Hoc Committee 

respectfully state the following: 

PRELIMINARY STATEMENT

1. In its memorandum decision [Docket No. 3568] (the “Memorandum Decision”) denying 

the Ad Hoc Committee’s prior request to terminate exclusivity, the Court made clear that the top priority 

in this case is “compensating victims of enormous and unimaginable tragedies.” Memorandum Decision 

at 3. As a result, the Court permitted the Debtors to maintain exclusivity, but warned the Debtors at the 

status conference held on August 27, 2019, that if the plan filed was “bogus” or not “legally permissible 

or couldn’t be confirmed without” consent of the objecting parties, the Court “probably would be 

receptive to terminating exclusivity very quickly.” Hr’g Tr. 42:21-43:4, August 27, 2019. Despite these 

clear statements from the Court, on September 9, 2019 [Docket No. 3841] the Debtors filed a plan (the 

“Placeholder Plan”) not supported by any of the wildfire victims and without substantial financing 

commitments.2 

 

1 The Ad Hoc Committee filed a statement pursuant to Rule 2019 of the Federal Rules of Bankruptcy Procedure on 

July 18, 2019 [Docket No. 3083]. Members of the Ad Hoc Committee hold in excess of $10 billion of funded debt claims 

against the Debtors. 

2 The Debtors will undoubtedly claim to have made progress based on their announcement on September 13, 2019 

of a settlement with the Ad Hoc Group of Subrogation Claim Holders (the “Subrogation Group”) to increase the plan 

treatment for Subrogation Wildfire Claims to $11 billion. For reasons that will be explained in greater detail below, this 

Case: 19-30088 Doc# 3940 Filed: 09/19/19 Entered: 09/19/19 14:03:36 Page 5 of

16
 

6 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

2. During this same period, however, the representatives of the two largest stakeholders in 

this case—the TCC and the Ad Hoc Committee—have been negotiating an alternative to the Debtors’ 

Placeholder Plan (the “Alternative Plan”) that focuses on resolving and fully funding the payment of the 

claims held by the victims of these tragic wildfires, rather than returns to equity holders and secondary 

market buyers of subrogation claims. The TCC and the Ad Hoc Committee are now prepared to present 

the Alternative Plan that incorporates a comprehensive settlement (the “Wildfire Claims Settlement”) of 

all wildfire claims against the Debtors, including subrogation claims, valued at $24 billion, paid with a 

mix of cash and equity of the Reorganized PG&E Corp., which both the TCC and the Ad Hoc Committee 

believe has the best chance to fully and fairly compensate wildfire victims. As important, the payments 

to victims under the Wildfire Claims Settlement and Alternative Plan will be satisfied from, among other 

sources, fully committed financing provided by the members of the Ad Hoc Committee—in stark 

contrast to the highly conditional and illusory “financing” that the Debtors hope will materialize to back 

the Placeholder Plan. Under the Alternative Plan, wildfire victims will be paid through a trust that will 

be acceptable to the TCC and overseen by those selected by the TCC to manage the process. By placing 

the governance of the mechanism by which wildfire victims will be paid in the hands of the 

representatives of those victims, the Alternative Plan ensures a quick and fair process for victims to 

receive their recoveries. 

3. Put simply, the Alternative Plan is the only “clear path to reach the goal of compensation 

for the fire victims who are involuntary creditors of these debtors as well as for the contractual claims of their 

voluntary creditors.” Memorandum Decision at p. 2. It is the only plan construct that is supported by the 

individual wildfire victims, and the only plan that can plausibly make these victims whole. Moreover, 

the Alternative Plan may avoid the need for a lengthy and uncertain estimation process to determine the 

Debtors’ aggregate wildfire liability, as well as the state court trial with respect to the Tubbs Fire,

 

settlement does not constitute true progress and in fact shifts $1.5 billion of already inadequate recoveries from individual

victims to the insurance companies and financial institutions that hold Subrogation Wildfire Claims. Thus, rather than 

moving parties closer, this “settlement” moves the Debtors further away from a resolution with the TCC and individual 

victims. 

Case: 19-30088 Doc# 3940 Filed: 09/19/19 Entered: 09/19/19 14:03:36 Page 6 of

16
 

7 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

providing the Debtors with a clear path to resolution of these cases well before the June 30, 2020 deadline 

to qualify for the go-forward wildfire fund under AB 1054. 

4. Thus, it is clear that while the TCC and the Ad Hoc Committee have been focused on 

finding a way to compensate fairly wildfire victims and expeditiously moving these cases out of 

bankruptcy, the Debtors have used their Exclusive Periods to serve only the interests of their equity 

holders and have done so at the expense of wildfire victims and other stakeholders. The Debtors have 

used this time (i) negotiating for illusory financing commitments with equity holders, (ii) negotiating 

with additional equity holders who are now major holders of Subrogation Wildfire Claims to settle those 

claims, and (iii) unsuccessfully lobbying the California state legislature during August and September 

to authorize the issuance of equity securitization bonds, and as a result have ended up with only the 

Placeholder Plan, which provides unacceptable risks and uncertainties to the wildfire victims. Even if 

this Court believed that the Placeholder Plan satisfied the low “bogus” standard and provides a path, 

which it does not, the Alternative Plan plainly satisfies the Court’s requirements. The Court now has 

before it two paths—the Debtors’ Placeholder Plan, which has the embedded risk that the tort claimants 

will prove claims far beyond the Debtors’ (or equity’s) ability to fund; and the Alternative Plan, which 

takes both the uncertainty as to the maximum tort claim amount, and uncertainty as to the ability to 

satisfy that agreed amount promptly, off the table. This Court should eliminate the risk to all claimants 

(and the risk to California ratepayers), by ensuring that the Alternative Plan is firmly in place as an 

alternative means to a speedy exit from bankruptcy. 

5. The TCC and the Ad Hoc Committee submit that the Alternative Plan presents the only 

available path to a fair and equitable outcome for victims and a path to resolution of these cases prior to 

June 30, 2020. Therefore, we respectfully request that the Court terminate the Exclusive Periods so that 

they may jointly file and solicit acceptances of the Alternative Plan, for only then is there a backstop, 

should the Placeholder Plan fail, which the TCC and the Ad Hoc Committee believe is inevitable. The 

primary consideration for a court in determining whether to maintain or terminate exclusivity is whether 

Case: 19-30088 Doc# 3940 Filed: 09/19/19 Entered: 09/19/19 14:03:36 Page 7 of

16
 

8 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

termination will “move the case forward.”3 Allowing the TCC and the Ad Hoc Committee to file and 

solicit acceptances of the Alternative Plan is the most certain way to move these cases forward and 

satisfy the claims of all creditors, including, most importantly, the wildfire victims. 

JURISDICTION AND VENUE

6. 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.), and Rule 5011-1(a) of the Bankruptcy Local Rules for the United States District Court for the 

Northern District of California (the “Bankruptcy Local Rules”). 

7. This is a core proceeding pursuant to 28 U.S.C. §157(b). 

8. Venue is proper before the Court pursuant to 28 U.S.C. §§ 1408 and 1409. 

9. The statutory basis for the relief requested in this Motion is section 1121(d) of the 

Bankruptcy Code. 

BACKGROUND

10. On June 25, 2019, the Ad Hoc Committee filed its motion to terminate the Debtors’ 

Exclusive Periods [Docket No. 2741] (the “Original Termination Motion”). On August 13, 2019, the 

Court conducted a hearing to consider the Original Termination Motion (the “Exclusivity Hearing”). On 

August 16, 2019, this Court entered the Memorandum Decision denying the Original Termination 

Motion, despite finding that the Ad Hoc Committee satisfied the standard set forth by the Court. 

11. The Memorandum Decision stated that that the Court was attempting to find a “clear path 

to reach the goal of compensation for the fire victims who are involuntary creditors of these debtors as well 

as for the contractual claims of their voluntary creditors[.]” Memorandum Decision at 2. The Court went on 

to warn the Debtors that the Court “probably would be very receptive to terminating exclusivity very 

quickly” if the Debtors’ plan was “bogus” and invited the Ad Hoc Committee to renew its motion if the 

 3 In re Adelphia Commc’ns Corp., 352 B.R. 578, 590 (Bankr. S.D.N.Y. 2006); In re Dow Corning Corp., 208 B.R. 

661, 670 (Bankr. E.D. Mich. 1997).

Case: 19-30088 Doc# 3940 Filed: 09/19/19 Entered: 09/19/19 14:03:36 Page 8 of

16
 

9 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Debtors’ plan was not “legally permissible or couldn’t be confirmed without” consent. Hr’g Tr. 42:21-

23, August 27, 2019. 

12. On September 9, 2019, the Debtors filed the Placeholder Plan. On September 13, 2019, 

the Debtors announced they had reached a settlement with the Subrogation Group. PG&E Corp., Current 

Report (Form 8-K) (Sept. 13, 2019).4 

RELIEF REQUESTED

13. By this Motion, the TCC and the Ad Hoc Committee seek entry of an order terminating 

the Debtors’ Exclusive Periods to permit the TCC and the Ad Hoc Committee to jointly file and solicit 

acceptances of a plan of reorganization based on the terms set forth in the Alternative Plan term sheet 

attached hereto. A proposed form of order approving the relief requested herein is annexed hereto as 

Exhibit A. 

BASIS FOR RELIEF

14. There is ample cause to terminate the Debtors’ Exclusive Periods. The Placeholder Plan 

was filed by the Debtors solely to maintain exclusivity. The Placeholder Plan has a multitude of 

deficiencies, the most serious of which are detailed below, including the fact that the Placeholder Plan 

is drastically underfunded and it proposes to severely undercompensate key impaired constituencies, 

most notably the wildfire victims and the holders of the Funded Debt Claims, without whose support the 

Placeholder Plan cannot be confirmed because of the absolute priority rule.5 Critically, the Placeholder 

Plan lacks the support of the representatives of the wildfire victims—the TCC, who now support 

termination of exclusivity to pursue the Alternative Plan. That alone should serve as a basis to terminate 

the Debtors’ Exclusive Periods to enable the TCC and the Ad Hoc Committee to pursue the Alternative 

 4 Other than providing a settlement amount for holders of subrogation claims, the Debtors have announced no 

details regarding this settlement and have not sought Court approval of such settlement.

5 11 U.S.C. 1129(b)(2)(B)(ii). See Placeholder Plan at p. 37 (acknowledging that Other Wildfire Claims are 

impaired as against both debtors but providing value to all four classes of interests and Subrogation Wildfire Claims, which 

are subordinate to their insureds.)

Case: 19-30088 Doc# 3940 Filed: 09/19/19 Entered: 09/19/19 14:03:36 Page 9 of

16
10

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Plan. Given the intense time strictures in these cases, this Court should not wait for the Debtor’s plan to 

inevitably fail in order to permit the only confirmable plan to move forward. 

15. First, despite what the Debtors told the Court previously, the Debtors’ filings indicate

they do not have the committed financing to fund the Placeholder Plan. At the Exclusivity Hearing, 

counsel for the Debtors told the Court that funding commitments had “been coming in quite rapidly” 

and were “now well in excess of $13 billion.” Hr’g Tr. 57:7-9, August 13, 2019. However, contrary to 

the express representation made to the Court, the 8-K filed by the Debtors on September 9, 2019 

indicated that the Debtors have only secured $1.5 billion in funding from the exact same parties that had 

been involved since early August.6 See PG&E Corp., Current Report (Form 8-K) (Sept. 9, 2019). The 

Debtors appear to have, at the very least, intentionally overstated their position to this Court in a 

desperate attempt to maintain exclusivity in August. 

16. Further, the limited commitments that the Debtors appear to have secured are entirely

contingent on the Debtors securing a total of $14 billion in substantially similar commitments by 

November 7, 2019.7

 As discussed below, the commitments from Knighthead and Abrams will also 

terminate in the event that the aggregate wildfire claims against the Debtors are in excess of $18.9 billion, 

which the TCC and the Ad Hoc Committee believe remains a strong possibility. Id. Instead of hard 

commitments for additional financing, the Debtors refer to so-called “highly confident letters” from 

several banks stating, subject to numerous conditions, that they believe they will be able to arrange equity 

and debt financing and place equity financing for the Debtors’ reorganization. Id. at Schedule 2. There 

is nothing, however, binding these banks to arrange any financing nor any consequences for their failure 

to do so. Rather than the $13 billion in additional financing promised by the Debtors at the August 13 

hearing, the Debtors appear to have nothing more than questionable commitments for $1.5 billion from 

6 The Debtors previously entered into an agreement to act in concert with Knighthead Funds and Abrams Capital 

Management, L.P. to develop a proposal to provide capital commitments in support of a potential plan of reorganization. 

PG&E Corp., Schedule 13D (Item 4)(Aug. 7, 2019).

7 Summary of Key Elements of Debtors’ Joint Chapter 11 Plan of Reorganization Dated September 9, 2019 

[Docket No. 3844], Schedule 1 at 6. 

Case: 19-30088 Doc# 3940 Filed: 09/19/19 Entered: 09/19/19 14:03:36 Page 10

of 16
 

11

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

the same parties the Debtors had previously announced and several nonbinding letters from financial 

institutions which fail to guarantee a single dollar in financing for the Debtors’ reorganization. 

17. Second, the aggregate caps on wildfire claims proposed in the Placeholder Plan are 

entirely inadequate, and instead of encouraging a consensual resolution with the TCC and individual 

victims, will assuredly encourage these parties to continue litigating and seeking a significantly higher 

estimation for the Debtors’ wildfire liabilities in the pending estimation proceeding. The Debtors have 

proposed a cap of $8.4 billion on what they describe as “Other Wildfire Claims.” Plan at 21. The 

Debtors’ Aug. 9, 2019 10Q states the Utility has determined it is probable the Utility will incur a loss 

liability for the wildfire claims arising from 22 of the 2017 and 2018 wildfires in the accrued amount of 

$17.9 billion,8 which reflects the “low end of the range of reasonably estimated losses”;9 it is reasonably 

possible that the amount of the loss will be greater than the amount accrued;10 and the amount of the 

Utility’s possible loss liability could exceed $30 billion.11 The Debtors’ own SEC admissions of their 

probable liability for the wildfire claims establishes the $8.4 billion cap for the Other Wildfire Claims is 

not appropriate for the TCC and individual victim claims. By capping recoveries for individual victims 

at such a low level, the Placeholder Plan guarantees that rather than consensually resolve the crucial 

issue of payment to victims, the Placeholder Plan will lead to hard-fought and protracted litigation which 

will likely extend these cases far beyond the June 30, 2020 deadline. 

18. While the Debtors will likely tout the settlement with the Subrogation Group as 

substantial progress in these cases, in reality, they are enriching a major equity holder at the expense of 

individual wildfire victims. To illustrate, the Placeholder Plan initially contained a cap of $8.5 billion 

on Subrogation Wildfire Claims, but after the announced deal with the Subrogation Group, that cap has 

been increased to $11 billion, a $2.5 billion increase. Plan at 14; PG&E Corp. Current Report (Form 8-

 8 This amount was subsequently increased to $18.9 billion. PG&E Corp. Current Report (Form 8-K) (Sept. 13, 

2019).

9 PG&E Corp., Quarterly Report (Form 10-Q) (Aug. 9, 2019).

10 Id. at 53-54.

11 Id. at 76.

Case: 19-30088 Doc# 3940 Filed: 09/19/19 Entered: 09/19/19 14:03:36 Page 11

of 16
 

12

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

K) (Sept. 13, 2019). However, pursuant to the announcement of the deal, the total cap for wildfire 

liability in the Debtors’ financing commitment letters is increased by only $1 billion. PG&E Corp. 

Current Report (Form 8-K) (Sept. 13, 2019). In other words, the Debtors intend to shift approximately 

$1.5 billion of recoveries previously allocated for individual wildfire victims to the Debtors’ allies in the 

Subrogation Group. The two goals of this settlement are clear: (i) to protect the interests of the Debtors’ 

equity holders by “boxing in” individual wildfire victims’ recoveries and (ii) to enable the Debtors to 

argue that they have made sufficient progress to maintain exclusivity. Since this Court’s denial of the 

Original Termination Motion, the Debtors have engaged in negotiations only with the equity group 

represented by the Jones Day firm and the Subrogation Group, which is itself dominated by The Baupost 

Group, L.L.C. (“Baupost”), one of the Debtors’ largest equity holders.12 The settlement of the 

Subrogation Wildfire Claims will enrich Baupost enormously at the expense of individual wildfire 

victims that have suffered actual loss. Baupost is reported to hold more than $3.3 billion in Subrogation 

Wildfire Claims,13 much of which, upon information and belief, was purchased at approximately 35% 

of face value.14 The Placeholder Plan would pay Baupost’s claims at roughly 59% of face value, 

allowing it to reap hundreds of millions of dollars in profit from the Debtors’ plan, at the expense of 

actual wildfire victims.15 Far from reaching common ground with a new constituency, the settlement 

reflects the Debtors again acting for the benefit of a large equity holder and creating the illusion that 

progress is being made in these cases. Any “progress” is, however, at the expense and to the detriment 

of individual wildfire victims and the certainty and adequacy of their recoveries.

19. Third, the Debtors play fast and loose in the Placeholder Plan with the concept of 

“impairment,” as evidenced by their proposed treatment of the Funded Debt Claims, another major 

 12 Baupost holds approximately 23% of the Subrogation Wildfire Claims held by the Subrogation Group and 24.5 

million shares of PG&E common stock, or 4.6% of the total outstanding PG&E common stock. See Third Amended 

Verified Statement of the Ad Hoc Group of Subrogation Claim Holders Pursuant to Bankruptcy Rule 2019 [Docket No. 

3020] (the “Subrogation 2019”), Exhibit A at 4

13 Subrogation 2019, Exhibit A at 4. 

14 Mark Chediak and Scott Deveau, PG&E’s $11 Billion Settlement with Insurers Sets up Clash with Fire Victims, 

Los Angeles Times (Sept. 13, 2019).

15 Id. 

Case: 19-30088 Doc# 3940 Filed: 09/19/19 Entered: 09/19/19 14:03:36 Page 12

of 16
 

13

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

creditor constituency. Under section 1124 of the Bankruptcy Code, “any alteration” of creditors’ rights 

under a plan of reorganization constitutes impairment for voting purposes. In re L&J Anaheim Assocs., 

995 F.2d 940, 942-943 (9th Cir. 1993). Thus, the TCC and the Ad Hoc Committee believe that in order 

to be unimpaired, the terms of the Funded Debt Claims must be respected, including requiring payments 

of make-whole premiums and postpetition interest at the contract rate, neither of which are provided for 

in the Placeholder Plan. Given that the Placeholder Plan does not leave unaltered the contractual rights 

relating to these claims, the holders of the Funded Debt Claims are impaired. See Placeholder Plan, 

Section 4.16(a). At a minimum, this entitles the holders of the Funded Debt Claims to vote and to receive 

disclosure with respect to their claims in advance of voting. 

20. In any event, because the treatment of the Funded Debt Claims will be the subject of 

litigation, the Debtors will need to reserve billions of dollars to protect the interests of the holders of 

Funded Debt Claims in case this Court or an appellate court determines that they are entitled to makewhole premiums and interest at the contract rate. Thus, the Placeholder Plan will inevitably face 

significant challenges as to its feasibility absent reserving funds for such a contingency. The Placeholder 

Plan does not currently provide for the escrowing of funds necessary to pay additional amounts to 

confirm the Placeholder Plan should this Court or an appellate court determine that the Funded Debt 

Claims are entitled to better treatment that the Placeholder Plan currently provides. 

21. Fourth, the Placeholder Plan violates the absolute priority rule and thus cannot be 

confirmed without the consent of the classes containing the constituents of the TCC and the Ad Hoc 

Committee. The absolute priority rule of section 1129(b)(2)(B)(ii) of the Bankruptcy Code provides that 

without an impaired class’ consent, no junior class shall “receive or retain” “any property” on account 

of their junior claim or interest. The Funded Debt Claims classes are impaired as set forth above, and the 

Debtors acknowledge that the Other Wildfire Claims classes are impaired. Yet the Placeholder Plan 

permits every class of interests to be retained (subject to dilution); three of which are not impaired at 

all.16 Moreover, the Placeholder Plan permits the Subrogation Wildfire Claims to participate despite the 

 16 See Placeholder Plan, Dkt. 3841 at p. 37 (summary chart), §§ 4.12, 4.13, 4.26, 4.27 (describing treatment).

Case: 19-30088 Doc# 3940 Filed: 09/19/19 Entered: 09/19/19 14:03:36 Page 13

of 16
 

14

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

fact that insurers’ subrogation claims are subordinated to their insured’s claims under California’s made 

whole doctrine and the Bankruptcy Code. See, e.g., Chandler v. State Farm Mut. Auto Ins. Co., 598 F.3d 

1115, 1117-1118 (9th Cir. 2010) (stating that the made whole doctrine generally “precludes an insurer from 

recovering any third-party funds unless and until the insured has been made whole for the loss” and extends 

to “all the elements of damages, not merely those for which the insurer has indemnified the insured.”)

22. Even if this Court cannot discard the Placeholder Plan on its face, exclusivity should be 

terminated. There is no need to make the Debtors’ emergence from bankruptcy subject to the satisfaction 

of every condition to the Placeholder Plan (including the requirement of favorable litigation outcomes 

on disputed tort claims in multiple fora). Second, the Alternative Plan not only eliminates those 

contingencies, it allows emergence without potentially burdening ratepayers with the cost of past wildfire 

liability for decades. And unlike when the Court previously considered termination, there is now not 

even a remote or hypothetical prospect of a “free for all” or “chaos” over multiple plans. The subrogation 

claimants have cast their lot with the Debtor/Equity plan, and the TCC and Ad Hoc Committee have 

locked arms on an alternative.

23. The Placeholder Plan puts the Debtors’ ability to meet the June 30, 2020 deadline in grave 

jeopardy by inviting contentious and protracted litigation on a number of key issues. The impaired or

unimpaired status of the Funded Debt Claims will need to be determined by the Court before a 

solicitation process can commence in earnest, because, as noted above, this issue will determine if a 

massive creditor constituency is entitled to vote. If the Ad Hoc Committee prevails and the holders of 

Funded Debt Claims are impaired and it is the Debtors’ intent to cramdown the Placeholder Plan over 

the dissent of the holders of these claims, this would lead to additional litigation surrounding plan 

confirmation regarding fair and equitable treatment of the Funded Debt Claims. The result of this 

litigation would be subject to appeal and could easily escalate to the Court of Appeals for the Ninth 

Circuit. As noted above, there is already likely to be hard-fought litigation surrounding confirmation 

with respect to the treatment of claims of the individual victims in the Placeholder Plan. The Placeholder 

Plan also does nothing to eliminate the need for a lengthy estimation process scheduled to run through

Case: 19-30088 Doc# 3940 Filed: 09/19/19 Entered: 09/19/19 14:03:36 Page 14

of 16
15

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

January in the District Court or the state court trial with respect to the Tubbs Fire. Rather than doing 

anything to streamline these cases or bring the company closer to emergence, the Debtors have focused 

solely on protecting the interests of existing equity holders and have proposed a Placeholder Plan 

doomed to languish in litigation. By contrast, the Alternative Plan eliminates the need for all of the 

costly and drawn-out litigation described herein, increasing the likelihood that these cases will be 

resolved prior to June 30, 2020, enabling the Debtors to participate in the go-forward wildfire fund. 

24. The TCC and the Ad Hoc Committee submit that the framework embodied in the

Alternative Plan represents the only viable path to move these cases forward and fully and fairly 

compensate the individual victims of wildfires. Therefore ample “cause” exists to terminate the 

Exclusive Periods to allow the TCC and the Ad Hoc Committee to file and solicit acceptances of the 

Alternative Plan. 

CONCLUSION

25. For the foregoing reasons, the TCC and the Ad Hoc Committee respectfully request that

this Court enter an order terminating the Debtors’ Exclusive Periods to permit the TCC and the Ad Hoc 

Committee to file and solicit acceptances of the Alternative Plan contemplated by the attached term sheet 

for the Alternative Plan. 

NOTICE

Notice of this Motion will be provided to (i) counsel to the Debtors; (ii) the Office of the U.S. 

Trustee for Region 17 (Attn: Andrew R. Vara, Esq. and Timothy Laffredi, Esq.); (iii) counsel to the 

Creditors 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 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; and (xii) those persons who have formally appeared in

these chapter 11 cases and requested service pursuant to Bankruptcy Rule 2002. The TCC and the Ad

Hoc Committee respectfully submit that no further notice is required.

Case: 19-30088 Doc# 3940 Filed: 09/19/19 Entered: 09/19/19 14:03:36 Page 15

of 16
16

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

WHEREFORE the TCC and the Ad Hoc Committee respectfully request entry of an order 

granting (i) the relief requested herein for cause shown and as being in the best interests of the Debtors 

and their estates and (ii) such other and further relief as the Court may deem just and proper. 

Dated: September 19, 2019 BAKER & HOSTETLER LLP

By: 

Robert A. Julian (SBN 88469) 

Cecily A. Dumas (SBN 111449) 

Eric E. Sagerman (SBN 155496) 

Lauren T. Attard (SBN 320898) 

Counsel to the Official Committee of Tort Claimants

AKIN GUMP STRAUSS HAUER & FELD LLP

By: /s/ Ashley Vinson Crawford 

Ashley Vinson Crawford (SBN 257246) 

Michael S. Stamer (pro hac vice) 

Ira S. Dizengoff (pro hac vice) 

David H. Botter (pro hac vice) 

Abid Qureshi (pro hac vice) 

Counsel to the Ad Hoc Committee of Senior Unsecured 

Noteholders of Pacific Gas and Electric Company

/s/ Cecily A. Dumas

Case: 19-30088 Doc# 3940 Filed: 09/19/19 Entered: 09/19/19 14:03:36 Page 16

of 16