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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 

AKIN GUMP STRAUSS HAUER & FELD LLP

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) 

REPLY IN SUPPORT OF MOTION OF THE 

AD HOC COMMITTEE OF SENIOR 

UNSECURED NOTEHOLDERS TO 

TERMINATE THE DEBTORS’ 

EXCLUSIVE PERIODS PURSUANT TO 

SECTION 1121(d)(1) OF THE 

BANKRUPTCY CODE

Hearing 

Date: July 24, 2019 

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

Place: Courtroom 17 

 450 Golden Gate Ave, 16th Floor 

 San Francisco, CA 94102 

Re: Docket No. 2741 

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)

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TABLE OF CONTENTS

PRELIMINARY STATEMENT .......................................................................................................1

FACTUAL DEVELOPMENTS SINCE THE FILING OF THE MOTION....................................6

A. California Enacts AB 1054 ......................................................................................6

B. The Ad Hoc Committee Secures Financing Commitments .....................................7

C. Outlines for Plan Constructs by Other Parties Show That the Ad Hoc Committee 

Proposal is Currently the Only Credible Plan Proposal ...........................................8

D. There is Substantial Frustration Among Stakeholders With The Debtors’ Lack of 

Progress And Support For Termination ................................................................. 11

E. The Debtors File The Estimation Motion ..............................................................12

THE COURT SHOULD TERMINATE EXCLUSIVITY AS TO THE AD HOC COMMITTEE 

IMMEDIATELY ................................................................................................................12

A. The Ad Hoc Committee Proposal Is Credible........................................................13

B. The Ad Hoc Committee Proposal Is Confirmable .................................................14

C. The Court Should Not Grant A Blanket Termination of Exclusivity .....................19

CONCLUSION ..............................................................................................................................21

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TABLE OF AUTHORITIES

CASES

Beal Bank USA v. Windmill Durango Office, LLC (In re Windmill Durango Office, LLC),

473 B.R. 762, 779 (B.A.P. 9th Cir. 2012) -------------------------------------------------------------------16

In Adelphia Commc’ns Corp., 352 B.R. 578, 590 (Bankr. S.D.N.Y. 2006)--------------------------------12

In re Ambanc La Mesa Ltd. P’ship, 115 F.3d 650, 656 (9th Cir. 1997) ------------------------------------17

In re Dow Corning Corp., 208 B.R. 661, 670 (Bankr. E.D. Mich. 1997) ----------------------------------12

In re Dow Corning Corp., 244 B.R. 721, 732-33 (Bankr. E.D. Mich. 1999) ------------------------------18

In re L&J Anaheim Assocs., 995 F.2d 940, 943 (9th Cir. 1993) ---------------------------------------------15

In re Pac. Gas & Elec. Co., No. 01-30923 [Docket No. 5060], Tr. of Feb. 27, 2002 Hearing, 115:6-713

In re Pac. Gas & Electric Co., No. 01-30923 (DM) (Bankr. N.D. Cal. 2001) [Docket No. 4580] -----19

In re Pac. Gas & Electric Co., No. 01-30923 (DM) (Bankr. N.D. Cal. 2001) [Docket No. 5155] -----20

In re Rexford Props. LLC, 558 B.R. 352, 365 (Bankr. C.D. Cal. 2016) ------------------------------------17

In re United Press Int’l, Inc., 60 B.R. 265, 271 (Bankr. D.D.C. 1986) -------------------------------------19

Pacific Gas and Electric Company, Decision 03-12-035, 2002 Cal. PUC LEXIS 1051, at *107-115

(CPUC April 22, 2002)------------------------------------------------------------------------------------------ 8

STATUTES

28 U.S.C. § 157(b)(5) ---------------------------------------------------------------------------------------------18

Assembly Bill No. 1054 (“AB 1054”), §1(a)(5) ----------------------------------------------------------passim

Cal Pub. Util. Code §§ 816, 818, 825 ---------------------------------------------------------------------------- 8

Cal. Pub. Util. Code §§ 451.1, 3292------------------------------------------------------------------------------ 6

Southern California Edison Co., Decision 18-06-008 (CPUC June 21, 2018) ----------------------------- 4

OTHER AUTHORITIES

PG&E Corp., Current Report (Form 8-K), Ex 10-1, Section 3(b)(iii) --------------------------------------11

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The Ad Hoc Committee of Senior Unsecured Noteholders of Pacific Gas and Electric Company 

(the “Ad Hoc Committee”)1 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 its undersigned counsel, Akin Gump Strauss Hauer & Feld LLP, hereby submits this reply in support 

(the “Reply”) of the Motion of the Ad Hoc Committee of Senior Unsecured Noteholders to Terminate 

the Debtors’ Exclusive Periods Pursuant to Section 1121(d)(1) of the Bankruptcy Code (the “Motion”). 

In further support of the Motion, and in response to the objections to the Motion (collectively, the 

“Objections” and the objecting parties, collectively the “Objectors”), the Ad Hoc Committee respectfully 

states the following: 

PRELIMINARY STATEMENT 

1. The Debtors’ first day declaration made clear that the primary issues necessitating the 

commencement of these chapter 11 cases were their inability to address the “multitude of pending claims 

and lawsuits” stemming from the 2017 and 2018 Northern California wildfires and “the continuing 

uncertainty surrounding [the Debtors’] ability to recover costs associated with [the unique doctrine of] 

inverse condemnation.” Amended Declaration of Jason P. Wells in Support of First Day Motions and 

Related Relief [Docket No. 263], 3. In order to address these issues and successfully emerge from these 

chapter 11 cases, at the very least, the Debtors need (i) substantial consideration to pay claimants of the 

recent catastrophic wildfires, and (ii) legislation to alleviate the burdens of inverse condemnation in the 

event there are future wildfires. 

2. The Debtors’ legislative requirement was addressed on July 12, 2019, when Governor 

Newsom signed into law comprehensive legislation to establish a statewide “wildfire fund [to] support[] 

the credit worthiness of electrical corporations, and provide[] a mechanism to attract capital for 

investment in safe, clean, and reliable power for California at a reasonable cost to ratepayers.” Assembly 

Bill No. 1054 (“AB 1054”), §1(a)(5). However, in order to access the benefits of the legislation that are 

critical to restoring the credit-worthiness of the Debtors—the Wildfire Fund provided under the newly1

 The Ad Hoc Committee filed an amended verified statement pursuant to Rule 2019 of the Federal Rules of 

Bankruptcy Procedure on July 18, 2019 [Docket No. 3083]. 

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enacted section 3292 of the Public Utilities Code (the “Wildfire Fund”), and the revised standard to 

recover costs associated with future wildfires—the Debtors must emerge from these chapter 11 cases 

by June 30, 2020. 

3. The first requirement—the need for substantial consideration to pay wildfire claims—is 

addressed through the Ad Hoc Committee’s good faith plan proposal (the “Ad Hoc Committee 

Proposal”), which provides for up to $31 billion in new money financing.2 As further detailed below, it 

is the only credible, confirmable plan of reorganization proposal that will provide the Debtors with the 

unprecedented level of financing needed to resolve and pay prepetition wildfire liabilities, continue the 

implementation of all necessary safety and hardening measures to avoid future wildfire disasters, fund 

the multi-billion dollar contributions that are required to participate in the Wildfire Fund, and emerge 

from these chapter 11 cases on the expedited timeline required by AB 1054. The plan construct proposed 

by the Debtors lacks the critical, substantial consideration necessary to address the wildfire liabilities 

and is, thus, unworkable. The plan construct referenced in the Ad Hoc Subrogation Group’s objection 

is bereft of any meaningful detail. It is in no stakeholder’s interest to waste critically important time to 

pursue plan constructs that are not credible or potentially confirmable, especially those that lack funding 

to address wildfire claims. 

4. The Ad Hoc Committee members are 25 diverse financial institutions, including 

investment companies, mutual funds, banks and an insurance company, which collectively have assets 

under management in the trillions, hold over $10 billion of the Utility’s debt, and have more than $11.3 

billion in claims against the Debtors. These institutions manage investments on behalf of, among others, 

individuals, pension plans, labor unions and college endowments. A number of the Ad Hoc Committee’s 

members are significant California-based institutions that employ thousands of California residents and 

have held the Utility’s debt for decades. Collectively, they have invested tens of billions of dollars across 

a variety of California industries, including other publicly owned and investor owned utilities. 

2

 The Ad Hoc Committee Proposal originally provided for an investment of new capital of up to $30 billion. This 

amount was subsequently increased to $31 billion in the amended Term Sheet filed on July 17, 2020 (the “Amended Term 

Sheet”) as Exhibit A to the commitment letter (the “Commitment Letter”) relating to the new equity and unsecured debt 

investments contemplated the Ad Hoc Committee Proposal. See Notice of Filing of Commitment Letter and Amended Plan 

Term Sheet [Docket No. 3024] (the “Notice of Filing of the Commitment Letter”). 

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Accordingly, the members of the Ad Hoc Committee have substantial, vested interests in the long-term 

health and success of the Debtors, as well as the energy system of California as a whole. The Objectors 

attempts to smear this group as “hijackers” only demonstrates their desperation and the absence of cogent 

arguments to deny termination. 

5. With the recent inception of the 2019 wildfire season and the impending June 30, 2020 

deadline, it is now time to move these cases as quickly as possible towards emergence. Unfortunately, 

to date the Debtors have almost entirely failed to do so and instead have spent a considerable amount of 

time lobbying for a controversial legislative bail-out for its equity holders that will almost certainly never 

materialize. Prior to the passage of AB 1054, the Debtors and the Shareholder Group (as defined below) 

aggressively lobbied to include language in AB 1054 that would permit the Debtors to attempt to pay 

for existing wildfire liabilities through the issuance of massive amounts of new debt via new 

securitization notes (self-servingly called “equity securitization bonds”). The Debtors apparently believe 

that a utility in bankruptcy should raise more debt to pay for the liabilities that drove it into chapter 11 

in the first place – thereby increasing the financial fragility of the company, but giving equity holders a 

lifeline against dilution. Their efforts in this regard are entirely misguided. 

6. The California state legislature and Governor Newsom flatly declined to provide 

authorization for the Debtors to issue equity securitization bonds in AB 1054. Indeed, just two weeks 

ago it was reported by Bloomberg (see Exhibit A annexed hereto), that Governor Newsom did not 

support PG&E’s contemplated equity securitization bond proposal. Nevertheless, the Debtors’ plan 

proposal outlined in their Objection remains dependent on the passage of the same legislation that was 

rejected earlier this month. As Tom Dalzell, the business manager of IBEW 1245 (which represents a 

large number of the Debtors’ workforce), recently stated3 with respect to the failure and ability to 

resuscitate the Debtors’ and Shareholder Group’s equity securitization bond proposal: 

First, the equity plan assumed that PG&E could issue tax-free bonds based on future profits. 

Legislation is required to realize that goal, and that doesn’t strike us as likely in the existing 

political climate. 

3

 Mr. Dalzell’s op-ed published in CalMatters is attached hereto as Exhibit B. 

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Second, the equity plan assumed that PG&E could issue tax-free bonds based on $5 billion in 

cost savings achieved over the next 10 years, when it was pointed out that those savings belong 

to ratepayers, not the shareholders, that part of the plan collapsed. 

7. There is no reason to believe that the Debtors will be able to convince the leadership in 

Sacramento to reverse course, and allow the Debtors to shield current equity holders from dilution by 

requiring ratepayers to bear the burden of the Debtors’ preexisting wildfire liabilities, meaningfully 

impairing the credit quality of the reorganized Debtors, and placing undue stress on the company, its 

capital structure, and cost of capital going forward. 

8. Even if the legislature and Governor granted the Debtors the ability to issue such bonds, 

the California Public Utilities Commission (CPUC), the Debtors’ primary regulator, would have to find 

that the issuance of debt will not be detrimental to PG&E’s utility operations or adverse to the public 

interest. That is highly speculative given CPUC’s mandate to protect and promote the public interest 

and ensure utility rates are just and reasonable. See e.g., Southern California Edison Co., Decision 18-

06-008 (CPUC June 21, 2018). And even if CPUC granted approval there is no indication that these 

massive securitizations will be purchased at the Debtors’ desired price. 

9. It is not surprising that the Debtors have made almost no progress with key constituents 

in this case. The Debtors have demonstrated that they have no ability in the near-term or long-term to 

raise the funds necessary to compensate wildfire victims and other creditors. The Debtors are unwilling 

to have a serious dialogue with bondholders and key creditors about alternative and more efficient ways 

to access capital, because any such financing would dilute the position of current shareholders, some of 

whom appear to be dictating the Debtors’ chosen path. 

10. Faced with the Debtors’ clear lack of meaningful progress and the Debtors’ insistence on 

pushing a plan proposal that favors current shareholders at the expense of all creditors, ratepayers and 

the State, as well as the substantial risks that continue to grow each day the Debtors languish in 

bankruptcy, the Ad Hoc Committee did exactly what it said it would do at the May 22, 2019 hearing on 

the Debtors’ motion to extend exclusivity4—file a motion to terminate the Debtors’ exclusive period, 

4

 Contrary to the Debtors’ and Shareholder Group’s contentions, counsel for the Ad Hoc Committee made clear 

that it would move to terminate exclusivity if it did not see progress in these chapter 11 cases: “We are concerned by the 

lack of progress that has been made toward a plan in—outside of this Court’s purview, outside of the courtroom. We are 

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accompanied by a term sheet (the “Term Sheet”) outlining the Ad Hoc Committee Proposal, in order to 

move these cases forward and provide a credible path to emergence. 

11. As intended, the filing of the Motion, and the proffer of a credible plan construct as set 

forth in the Term Sheet, appears to have finally spurred parties into action. In response to the Motion, 

albeit in the form of the Objections rather than constructive engagement, the Debtors and the Ad Hoc 

Subrogation Group have provided broad outlines of plan constructs, both, however, suffering from 

multiple material deficiencies, as explained in greater detail below. The Debtors have also finally taken 

a necessary, proactive step to resolve the Debtors’ prepetition wildfire liabilities with the filing of the 

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

Estimation Procedures [Docket No. 3091] (the “Estimation Motion”). 

12. Recent developments, discussed in more detail below, in fact prove that the Ad Hoc 

Committee Proposal is credible and that decisive steps must be taken now. Notwithstanding the 

hyperbolic statements, none of the Objectors has identified a legitimate basis for the Court to conclude 

that the Ad Hoc Committee Proposal is not credible or that terminating exclusivity now to allow the Ad 

Hoc Committee to develop and pursue confirmation of its plan would not materially accelerate the path 

towards a timely emergence and galvanize key stakeholders. Moreover, the Objectors lose sight of the 

fact that the Ad Hoc Committee Proposal is a proposal, and that modifications can, and are expected to, 

be made as the Ad Hoc Committee develops a formal plan and builds consensus with the other major 

stakeholders, as is to be expected in all large and complex chapter 11 cases. The Ad Hoc Committee 

invites engagement with the Debtors and further negotiation with other stakeholders and believes that, 

if exclusivity is terminated, it will propose a confirmable plan of reorganization that provides for full 

and fair payment of all creditors, including wildfire claimants, and can resolve these chapter 11 cases 

prior to June 30, 2020. 

concerned about that. We remain concerned about that. And Your Honor, if those circumstances don’t change soon, if 

progress is not made towards a confirmable plan of reorganization here, then it is our expectation that in that circumstance a 

motion either to shorten whatever remains of the exclusivity period that might be granted today, or a motion to terminate it 

right away, might in those circumstances be appropriate....[O]nce there is a path towards a viable and confirmable plan and 

we don’t see the debtor making progress toward their own plan, that would be a circumstance in which our group...might 

be back before the Court with a motion to terminate or a motion to shorten.” Tr. of May 22, 2019 Hearing, 36:7-37:4. 

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13. As required by this Court as a prerequisite to terminating exclusivity, the Ad Hoc 

Committee Proposal sets forth a credible, confirmable plan and, therefore, the Ad Hoc Committee 

respectfully requests the authority to propose and pursue confirmation of a plan of reorganization. That 

said, the Ad Hoc Committee welcomes competition from any other party that is willing to file its own 

motion to terminate exclusivity and make an alternative, credible and potentially confirmable proposal. 

As Governor Newsom recently stated at a press conference after signing AB 1054, “I think more 

competition’s good – between the bondholders and the equity. I think having a process where there’s 

alternative considerations...is healthy. I want a healthy process. I don’t want one side of that equation 

dominating the process.”5 Ultimately, the market will determine if the Ad Hoc Committee Proposal is 

the best arrangement for the Debtors and all stakeholders, and competition from other parties, with 

credible sources of financing may ultimately result in substantial modifications to the Ad Hoc Committee 

Proposal. In any event, maintaining exclusivity to enable the Debtors to pursue fruitless paths that are 

ultimately negative for all stakeholders, simply to protect shareholders is counterproductive and imperils 

the Debtors’ ability to meet the approaching legislative deadline. 

FACTUAL DEVELOPMENTS SINCE THE FILING OF THE MOTION 

A. California Enacts AB 1054 

14. On July 12, 2019, through the extraordinary efforts of the California state legislature and 

Governor Newsom, Assembly Bill No. 1054 (“AB 1054”) was signed into law. The legislation provides 

for, among other things, the establishment of a $21 billion Wildfire Fund and a revised cost recovery 

standard, which together will provide California utilities that elect to participate in the fund timely access 

to capital, additional insurance, and greater certainty regarding cost recovery for the expenses associated 

with potential future utility-caused wildfires. E.g., Cal. Pub. Util. Code §§ 451.1, 3292. All parties 

agree that it is critical that the Debtors meet all applicable criteria for participation in the Wildfire Fund, 

as the Wildfire Fund is the best and only solution for the Debtors’ long-term wildfire exposure and 

provides the Debtors with some amount of insurance against new wildfire liabilities arising during the 

pendency of these chapter 11 cases. Crucially, for the Debtors to participate in the Wildfire Fund, they 

5

 Footage available at https://twitter.com/govpressoffice?lang=en (statement begins at 18:02 of 20:52). 

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must emerge from these chapter 11 cases by June 30, 2020. Uncertainty regarding the passage of AB 

1054 and the creation of the Wildfire Fund was a significant contingency at the time of the filing of the 

Motion and Term Sheet.6 Following the enactment of the required legislation, the Ad Hoc Committee 

promptly filed an Amended Term Sheet to clarify that the legislation would be acceptable, so long as the 

Debtors comply with all of the requirements to participate in the Wildfire Fund and to gain access to the 

new cost recovery standard, including, importantly, that the Debtors emerge from these chapter 11 cases 

by the legislatively-mandated deadline of June 30, 2020. 

B. The Ad Hoc Committee Secures Financing Commitments 

15. On July 17, 2020, the Ad Hoc Committee filed a commitment letter (the “Commitment 

Letter”) [Docket No. 3024] executed by 12 members of the Ad Hoc Committee, all reputable and wellcapitalized financial institutions, committing to provide the funding for (a) the $19-20 billion new equity 

financing (the PG&E Corp. New Money Investment) and (b) the $4.0-5.4 billion unsecured debt 

financing (the New PG&E Corp. Senior Unsecured Notes Investment) contemplated in the Amended 

Term Sheet, which accounts for $25.4 billion of the up to $31 billion new money investment required 

under the Ad Hoc Committee Proposal. The Ad Hoc Committee Proposal contemplates that the 

remaining new money will be raised from a market offering of $5.5 billion of New Utility Secured Notes7

and the proceeds of the Debtors’ insurance policies. While the Debtors take issue with the reasonable 

conditions to funding provided in the Commitment Letter and the Amended Term Sheet, which are 

market terms for commitments of this type, the Commitment Letter proves that the Ad Hoc Committee 

is currently the only credible source of the billions of dollars of committed financing required to fund 

the Debtors’ prompt exit from chapter 11 under any reasonable plan scenario. 

6

 Under the original Term Sheet, the seventh condition precedent to the effective date of the plan was intended to 

reflect the Ad Hoc Committee’s concern about, and the Debtors need for, the creation of a Wildfire Fund. 

7

 The Debtors raise issues with the lack of clarity and commitment regarding the New Utility Secured Notes. It is 

the Ad Hoc Committee’s view that the issuance of the New Utility Secured Notes on market terms did not require a formal 

commitment, which would give rise to additional fees. If the Debtors would like the members of the Ad Hoc Committee to 

formally commit to purchase the New Utility Secured Notes, the Commitment Letter can be amended to so provide. 

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C. Outlines for Plan Constructs by Other Parties Show That the Ad Hoc Committee 

Proposal is Currently the Only Credible Plan Proposal 

16. The Motion and proposal embodied in the Term Sheet for a plan of reorganization backed 

by the Ad Hoc Committee have had their desired effect and, after nearly 6 months, key parties in these 

cases—the Debtors and the Ad Hoc Subrogation Group—have finally expressed their views on the 

contours of a plan of reorganization in the Objections. Interestingly, despite the attacks leveled at the 

Ad Hoc Committee Proposal, a review of the broad plan concepts outlined by the Debtors and the Ad 

Hoc Subrogation Group demonstrate overlap in several broad respects with the material terms of the Ad 

Hoc Committee Proposal.8

17. The fact that the other plan concepts are, just that, concepts contained in the Objections 

also highlights that the Ad Hoc Committee Proposal is the only credible, fully-baked plan proposal 

currently before the Court and why exclusivity should be terminated immediately to allow the Ad Hoc 

Committee to pursue its plan. Under any plan construct, the Debtors will require tens of billions of 

dollars in new money to guarantee their successful emergence. It is unclear how the Debtors and the Ad 

Hoc Subrogation Group will raise the financing required under their proposed plan constructs, and these 

constructs suffer from insurmountable contingencies. 

18. The Debtors’ proposed plan construct is entirely impracticable, as it contemplates funding 

by way of cash raised from existing equity holders “plus equity financed securitized bonds.” Debtor 

Objection, 8:12-13. The Debtors’ proposed rights offering to existing equity holders suffers from a 

material contingency with respect to the existing equity holders’ willingness and ability to fund the 

required amounts. More problematic is the Debtors’ proposed financing through equity securitization 

bonds, which is highly contingent and will require both additional legislation to be passed in order to 

authorize the Debtors to issue such bonds and approval from the CPUC. See, e.g., Cal Pub. Util. Code 

§§ 816, 818, 825; Pacific Gas and Electric Company, Decision 03-12-035, 2002 Cal. PUC LEXIS 1051, 

at *107-115 (CPUC April 22, 2002). And since the cost of securitization debt is paid directly by fixed 

amounts of rate payment, it is highly uncertain whether the Debtors could raise the requisite fund. What 

8 See Debtor Objection, 8:1-13; Objection and Response of the Ad Hoc Group of Subrogation Claim Holders to the 

Motion of the Ad Hoc Committee of Senior Unsecured Noteholders to Terminate the Debtors’ Exclusive Periods Pursuant 

to Section 1121(d)(1) of the Bankruptcy Code [Docket No. 3062] (the “Subrogation Group Objection”), 3:13-17, 26:3-14. 

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the Debtors fail to mention, though, is that the California state legislature declined to build such 

authorization into AB 1054. The Debtors’ financing, therefore, is entirely contingent on the pursuit of 

legislation that has already been rejected. See Debtors’ Objection, Ex. A (WSJ Article). And there is 

no reason for this Court to assume that such legislation could pass in the next session, or even if it did, 

that it would provide the Debtors a workable path to emergence. If the Debtors proceed with seeking 

approval of the equity securitization bond construct, such legislation would not be considered, no less 

enacted, until the legislature returns from its summer recess, assuming the Governor and the legislature 

would even enact legislation that has already been rejected. Assuming passage, the Debtors then have 

to seek CPUC-approval in a contested process that will last an undetermined amount of time. This runs 

the significant risk that a Debtor-proposed plan will not be effective by the June 30, 2020 deadline. 

Therefore, a “wait-and-see” approach that would open up exclusivity in late September simply is not 

workable. 

19. Contrary to the Debtors’ suggestion that their plan is ratepayer-neutral, the “equity 

securitization bonds” would place undue stress on the Company’s cash flow and credit metrics, thereby 

increasing the reorganized Debtors’ cost of debt financing, which would ultimately be passed through to 

ratepayers in the form of higher rates. Furthermore, the Company’s reduced cash flow would potentially 

prevent it from spending additional funds for needed system hardening and other safety measures, which 

would create further risk to ratepayers from potential future wildfire liabilities. The Utility Reform 

Network, in its joinder to the Motion, stated the distinction between the Ad Hoc Committee Proposal 

and the Debtor/Shareholder Group plan construct the best: “What is notable is that the [Ad Hoc 

Committee is] proposing a substantial influx of new capital to address the many needs of the Debtors 

and creditors with a neutral impact on ratepayers going forward. By contrast, all reports are that the 

Debtors and stockholders would shift to others the risk and responsibility for corporate malfeasance and 

criminality with little or no impact on their own positions.” Joinder by TURN in Motion by Ad Hoc 

Committee of Senior Unsecured Noteholders to Terminate the Exclusive Periods Pursuant to Section 

1121(d)(1) of the Bankruptcy Code [Docket No. 2918]. 

20. The contentions made by the shareholder group represented by the Jones Day firm (the 

“Shareholder Group”) that such legislation would have provided for a “low-cost mechanism for utilities 

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(including PG&E) to finance payments to wildfire victims and contributions to the wildfire insurance 

fund at the expense of shareholders without any rate increases” or that California lawmakers’ rejection 

of such legislation was due to the “bad faith” efforts of the Ad Hoc Committee are simply false. 

Objection of Certain PG&E Shareholders to Motion of the Ad Hoc Committee of Senior Unsecured 

Noteholders to Terminate the Debtors’ Exclusive Periods [Docket No. 3072] (the “Shareholder Group 

Objection”), 4:24-5:3. To the extent members of the Ad Hoc Committee shared views on prospective 

legislation, those discussions were in good faith and primarily focused on explaining the terms under 

which the Ad Hoc Committee’s members would be willing to provide the magnitude of new capital 

necessary to recapitalize and rehabilitate the Utility so that the Debtors could once again provide safe, 

affordable and reliable service to its customers. While today is not the day to analyze the good faith, or 

lack thereof, of the Shareholder Group, suffice it to say that their attempts to have California ratepayers 

shoulder the costs of the wildfires so that they suffer no dilution were far from altruistic. 

21. The Ad Hoc Subrogation Group proposes giving existing equity holders “the exclusive 

opportunity to participate in a rights offering to recapitalize the Debtors” in order to, presumably, fund 

(a) a settlement of the Debtors’ subrogation claims at a “reasonable level” and (b) a wildfire claims trust. 

However, the success of the rights offering is dependent on the ability and willingness of existing equity 

holders to fund into the Ad Hoc Subrogation Group’s plan. The Ad Hoc Subrogation Group has stated 

in their objection to the Motion that the Ad Hoc Committee’s proposed maximum amount for estimated 

aggregate wildfire liabilities, $18.4 billion, is “far below what the members of the Ad Hoc Subrogation 

Group or of the Official Committee of Tort Claimants could ever support.” Subrogation Group 

Objection, 2:20-3:1. Assuming that the Ad Hoc Subrogation Group implies that the settlement of the 

subrogation and wildfire claims will require substantially greater funding than the $18.4 billion provided 

for in the Ad Hoc Committee Proposal, there is a legitimate question as to whether equity holders would 

ever be willing to participate in a rights offering of the required size or suffer the dilution contemplated 

therein. There is also no indication that the Ad Hoc Subrogation Group has had any discussions with 

equity holders regarding the rights offering, and the Ad Hoc Subrogation Group itself admits that there 

had been little progress in negotiations with the Debtors, who appear to be acting as a proxy for the 

controlling equity holders. Id., 4:11-13. 

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D. There is Substantial Frustration Among Stakeholders With The Debtors’ Lack of 

Progress And Support For Termination 

22. Despite the Debtors’ protestations to the contrary, the Court should be troubled by the 

lack of progress made by the Debtors in these cases. Similarly, the number of parties from many different 

constituencies that have expressed their support for termination of exclusivity should also be troubling. 

Some of these parties have objected to the Motion, but indicated that they would support termination of 

exclusivity in one form or another, such as the Ad Hoc Subrogation Group, which asks that termination 

apply to all parties if it is granted, and the Tort Committee, which will support termination of exclusivity 

but only “when it is ready to file its own plan,” whenever that may be. 

23. To date, despite the Debtors’ purported “substantial progress,” they have entered into one 

settlement with a group of public entities that hold wildfire claims (the “Public Entities”), which 

represent only a small portion of the universe of claims against the Debtors. See PG&E Corp., Current 

Report (Form 8-K), Ex 10-1, Section 3(b)(iii). As pointed out by the Ad Hoc Subrogation Group, a 

critical term of this settlement is the agreement of the Public Entities to vote against any plan not 

proposed or supported by the Debtors. Subrogation Group Objection, n.1. By locking-in these Public 

Entities and prohibiting them from supporting anything other than a plan proposed by the Debtors, 

including a superior competing plan even if it provides the same treatment for such claims, the Debtors 

are merely attempting to insulate themselves from any competition. The basis for the Debtors’ 

substantial progress argument is, thus, questionable from a fiduciary duty and/or good faith perspective 

and could be characterized as holding the plan process hostage. 

24. Nor have the Debtors made any progress with other substantial stakeholders, as is evident 

from the various pleadings filed by key stakeholders. Specifically, the Tort Committee flatly alleges, 

“The Debtors have not engaged in negotiations with the TCC.” Objection of the Committee of Tort 

Claimants to Motion of the Ad Hoc Committee of Senior Unsecured Noteholders to Terminate the 

Debtors’ Exclusive Period Pursuant to Section 1121(d)(1) [Docket No. 3069] (the “TCC Objection”), 

1:12-13. The Ad Hoc Subrogation Group states, “To date, very little progress has been made in 

settlement negotiations with the Debtors in large part because the parties cannot agree on the extent of 

the Debtors’ liability for the Tubbs fire.” Subrogation Group Objection, 4:11-13. The Official 

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Committee of Unsecured Creditors asserts that “the Official Committee’s overtures” regarding plan 

substance, process and timing “have been met with silence.” Statement of the Official Committee of 

Unsecured Creditors Regarding the Ad Hoc Committee of Senior Unsecured Noteholders’ Motion to 

Terminate the Debtors’ Exclusive Periods Pursuant to Section 1121(d)(1) of the Bankruptcy Code

[Docket No. 3064], 8:9-12. In addition, the Debtors have failed completely to engage with the Ad Hoc 

Committee. 

25. These facts indicate that there has been little or no progress by the Debtors in these cases 

toward the negotiation of a plan of reorganization. Therefore, it is in the interest of all stakeholders and 

the estates for the Court to terminate exclusivity immediately to allow the Ad Hoc Committee to propose 

its plan of reorganization, to introduce the competition that the Debtors and the Shareholder Group 

desperately want to avoid, and to encourage parties to begin truly negotiating with each other. 

E. The Debtors File The Estimation Motion 

26. On July 18, 2019, without notice to the Ad Hoc Committee despite its repeated request 

for a dialogue and discussion regarding a plan for estimating wildfire claims, the Debtors filed the 

Estimation Motion. While the Ad Hoc Committee continues to analyze the Estimation Motion to 

determine its position with respect to the specific procedures proposed by the Debtors, it appears to be 

an important first step, albeit six months into these cases, towards resolving the Debtors’ prepetition 

wildfire liabilities. 

THE COURT SHOULD TERMINATE EXCLUSIVITY AS TO THE AD HOC COMMITTEE 

IMMEDIATELY 

27. The Debtors’ contention that the Motion is surprisingly “devoid of any meaningful 

discussion, analysis, or examination of the...factors that Bankruptcy Courts typically consider” is 

entirely misplaced. Debtor Objection, 10:26-28. First, as discussed in the Motion, the primary 

consideration for a court in determining whether to terminate exclusivity is whether termination will 

move the case forward. Motion, 8:17-20 (citing In Adelphia Commc’ns Corp., 352 B.R. 578, 590 (Bankr. 

S.D.N.Y. 2006); and In re Dow Corning Corp., 208 B.R. 661, 670 (Bankr. E.D. Mich. 1997)). As set 

forth in the Motion and herein, based on the current facts and circumstances, terminating exclusivity will 

clearly move these cases forward. Second, and more importantly, the Court was very clear regarding its 

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views on exclusivity and clearly articulated the standard it would apply. As stated by this Court at the 

May 22, 2019 hearing on the Debtors’ motion to extend exclusivity, the relevant inquiry in determining 

whether to terminate exclusivity to allow a party other than the Debtor to file and solicit a plan of 

reorganization is whether the party has a proposal for a plan that is “credible and potentially 

confirmable.” Tr. of May 22, 2019 Hearing, 76:11-12. The Ad Hoc Committee Proposal clearly satisfies 

the Court’s standard. 

A. The Ad Hoc Committee Proposal Is Credible 

28. The Amended Term Sheet and the Ad Hoc Committee Proposal are the product of 

significant time and effort expended by the members of the Ad Hoc Committee and their advisors to 

craft a confirmable plan of reorganization. As stated above, the credibility of the Ad Hoc Committee 

has only been enhanced by developments in the past several weeks. The Ad Hoc Committee has secured 

commitments from 12 of its members, which are all reputable and well-capitalized financial institutions, 

to provide up to $25.4 billion of new money financing. Moreover, legislation providing for the creation 

of the Wildfire Fund, which was contemplated in and required by the original Term Sheet, has passed, 

and the Amended Term Sheet requires only that the Debtors fully comply with the requirements of AB 

1054 to qualify to participate in the Wildfire Fund. 

29. In response, the Debtors contend that the commitments are “purely conditional,” that 

economic terms of the new money investment, such as pricing and pro forma enterprise value are 

missing, that the Amended Term Sheet does not provide terms for the proposed $5.5 billion New Utility 

Secured Notes and that issuing secured replacement debt will “severely limit” the Debtors’ financial 

flexibility. Debtor Objection, 14:24-15:5. In addition, the Debtors allege that there is a new money 

shortfall in the Ad Hoc Committee Proposal of nearly $4 billion. Id., 15:15-18. 

30. None of these supposed “deficiencies,” which are not deficiencies in any event, affects 

the credibility of the Ad Hoc Committee Proposal. As the Court stated in 2002 in the first PG&E 

bankruptcy when confronted with a similar decision, “The fact that you don’t have all the t’s crossed and 

the i's dotted doesn’t mean you can’t propose a plan.” In re Pac. Gas & Elec. Co., No. 01-30923 [Docket 

No. 5060], Tr. of Feb. 27, 2002 Hearing, 115:6-7. First, the Debtors do not identify any specific 

problematic or non-market conditions in either the Commitment Letter or the Amended Term Sheet. 

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Any investor group committing more than $20 billion of financing will be expected to seek the protection 

of certain reasonable conditions to such financing. Second, the Ad Hoc Committee is not required to 

perform a valuation at this stage. While the time may come for the Ad Hoc Committee to opine on the 

valuation of the Debtors, that question is irrelevant to the Court’s inquiry with respect to the narrow 

question of terminating the exclusivity periods. Ultimately, the market will determine if the Ad Hoc 

Committee is proposing to pay fair market value. Third, the Amended Term Sheet provides that the 

New Secured Utility Notes will be issued through a market transaction, and, as a result, the terms of 

what is essentially a refinancing transaction will be determined by the market closer to the issuance of 

such notes. Fourth, the Ad Hoc Committee disputes the Debtors’ baseless contention that the Debtors’ 

financial condition will be severely impaired by the Replacement Notes, which is contradicted by the 

fact that Debtors intend to seek to raise massively greater amounts of debt by securing rate payments 

(and not just replacing existing unsecured debt with secured debt as the Ad Hoc Committee Proposal 

provides). In any event, this is clearly a factual, feasibility issue that is more properly reserved for a 

confirmation hearing. 

31. Lastly, it is impossible for the Ad Hoc Committee to opine on the Debtors’ contention of 

a purported shortfall in the Ad Hoc Committee Proposal. The quantum of the new money investment 

commitment provided by the Ad Hoc Committee is based on publicly available information because the 

Debtors have failed to share any substantive information with the Ad Hoc Committee or its advisors todate, despite substantial information requests. The Ad Hoc Committee will require access to 

substantially more operational information than it has been given by the Debtors in order to determine 

whether its proposal needs to be modified. The Ad Hoc Committee considers the Amended Term Sheet 

a living, breathing document and will gladly work with the Debtors in making any necessary 

adjustments. In sum, there are no material contingencies or deficiencies that would indicate that the Ad 

Hoc Committee proposal is anything other than credible. 

B. The Ad Hoc Committee Proposal Is Confirmable 

32. As the Ad Hoc Committee understands the Court’s standard, the question is not whether 

the proposed plan is perfectly confirmable today, but whether it is “potentially confirmable.” None of 

the arguments raised by the Objectors suggests that the Ad Hoc Committee will not be able to confirm 

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a plan that is broadly consistent with the terms set forth in the Amended Term Sheet. As stated 

previously, the Ad Hoc Committee Proposal is a proposal and is, therefore, subject to modification, 

including to account for any issue that may be an impediment to confirmation. However, the Ad Hoc 

Committee will address some of the major substantive confirmation arguments raised by the Objectors 

below. 

33. Treatment of Note Claims. The Objectors contend that the proposed treatment for the 

class of longer-term unsecured notes of the Utility violates the absolute priority rule. They argue that 

the holders of the Replacement Notes will receive greater than full payment of their claims based on the 

conclusory assertion that the trading value post-effective date will be greater than par, despite the 

Replacement Notes’ lower rate of interest. First, as a factual matter, this is a highly speculative argument 

for which the Objectors present no credible, verifiable evidence and, as with many other supposed 

deficiencies identified by the Objectors, is more properly reserved for a confirmation hearing. Second, 

the Objectors cite no case law, other than cases that merely restate the axiom that a creditor cannot 

receive more than full payment of its claim, in support of their incorrect proposition that recoveries for 

creditors receiving replacement debt should be assessed by reference to the potential future trading price 

of such replacement debt. The hypothetical post-effective date trading price of the Replacement Notes 

is both speculative and irrelevant. 

34. In conjunction with the full payment argument, the Objectors contend that the Ad Hoc 

Committee Proposal artificially impairs long-term unsecured notes in order to manufacture an impaired 

accepting class. This implies that the interest rate reduction proposed for long-term unsecured notes is 

somehow not material. But the interest rate reduction yields cash savings to the Utility and its ratepayers 

of approximately $200 million. Moreover, even assuming the Court deems the impairment not to be 

material, the Objectors’ case law arguments are not applicable. The Ninth Circuit has held that 

“impairment” is a term of art that applies to any alteration of rights. In re L&J Anaheim Assocs., 995 

F.2d 940, 943 (9th Cir. 1993). A court’s determination that a plan has not been proposed in good faith 

under Bankruptcy Code section 1129(a)(3) is a fact-specific inquiry into whether the totality of 

circumstances supports a conclusion that the plan “achieves a result consistent with the objectives and 

purposes of the Bankruptcy Code.” Beal Bank USA v. Windmill Durango Office, LLC (In re Windmill 

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Durango Office, LLC), 473 B.R. 762, 779 (B.A.P. 9th Cir. 2012). Again, this is naturally a confirmation 

issue and in any event it is clear that the Ad Hoc Committee’s actions to date should indicate that it has 

at all times acted in good faith in developing and furthering its plan proposal. 

35. In addition, the Ad Hoc Committee will object to any settlement that contains the 

Debtors’ inappropriate and anti-competitive lock-up provision contained in their settlement agreement 

with the Public Entities, which prohibits the Public Entities from voting for any other plan. The Ad Hoc 

Committee does not believe such lock-ups are enforceable and will be rejected by this Court. The 

Amended Term Sheet provides the Public Entities with the same treatment as required under the 

settlement agreement and therefore it is anticipated that the Public Entities will be an additional impaired 

accepting class. 

36. The Shareholder Group contends that the Ad Hoc Committee Proposal provides for 

makewhole premiums that are not present in the governing debt documents and provides for postpetition 

interest at the contract rate in contravention of Ninth Circuit law. Shareholder Group Objection, 11:10-

12. The Ad Hoc Committee Proposal provides for the payment of makewhole premiums to the holders 

of shorter-term unsecured notes issued by the Utility, which will be paid in full in cash. Payment of the 

premium is pursuant to and in accordance with the language in the governing debt documents, contrary 

to the Shareholder Group’s contention. Moreover, the applicability and payment of any makewhole is 

also a confirmation issue. Likewise, the proper postpetition interest rate to be paid to creditors is an 

issue for determination at the confirmation hearing. 

37. Treatment of Equity. The Debtors contend that the Ad Hoc Committee Proposal 

unfairly discriminates against non-employee shareholders by providing for “true-ups” of equity holdings 

of employees and retirees to protect against the dilutive effects of the new money investments 

contemplated by the Ad Hoc Committee Proposal. Debtor Objection, 4:18-22. This argument is both 

distasteful and without merit. First, there is no discriminatory treatment under the plan of employee and 

retiree shareholders. Instead, the true-ups contemplated under the Amended Term Sheet are provided as 

an employee and retirement benefit and will occur pursuant to new equity issuances within 90 days after 

the effective date of the plan. Moreover, even if non-employee shareholders do not receive the benefit 

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of the employee true-up under the plan, the key inquiry is whether the discrimination is “unfair.”9 Here, 

the Debtors must surely recognize that there is ample justification for the proposed treatment because it 

is intended to maintain the Debtors’ relationship with their own workforce, which will be critical to the 

success of the reorganization, and to protect employee benefits that have been earned through services 

provided by the Debtors’ employees. It is telling that the Debtors would rather take up the cause of 

protecting shareholders from dilution than protecting the interests of their employees. As with other 

issues raised by the Objectors, however, this is a confirmation issue. 

38. The Debtors also contend that the Ad Hoc Committee Proposal “puts at risk the Debtors’ 

substantial net operating losses (“NOLS”) for tax purposes” and that the Ad Hoc Committee Proposal 

leaves the Debtors uncertain as to “the impact on extremely valuable NOLs.” Debtor Objection, 4:22-

23; 5:24. Based on the Ad Hoc Committee’s analysis of publicly available information, the Ad Hoc 

Committee proposal will result in no risk of loss of NOLs and that the impact on the use of NOLs will 

not be material in the overall context of the transaction. 

39. Treatment of Wildfire Claims. The Tort Committee and Ad Hoc Subrogation Group 

each take issue with the Ad Hoc Committee Proposal’s total proposed amount for the payment of wildfire 

and subrogation claims and the contemplated estimation of such claims. The Ad Hoc Committee 

Proposal sets forth reasonable and legally permissible mechanisms to treat Wildfire Claims. Holders of 

Wildfire Claims who vote in favor of the Plan agree to have their claims paid in full in accordance with 

the Wildfire Claims Trust procedures, subject to the Agreed Capped Amounts set forth in the term sheet. 

The Agreed Capped Amounts were developed based on (i) the California Department of Insurance 

reports of insured losses resulting from the 2017 and 2018 Northern California wildfires in the Utility’s 

service territory, (ii) publicly-available and other information relating to the ratio of insured to under and 

uninsured losses and historical settlement values for past wildfire claims, and (iii) reasonable adjustments 

9

 In the Ninth Circuit, discrimination is permissible if: (1) the discrimination is supported by a reasonable basis, (2) 

the debtor could not confirm or consummate a plan without the discrimination, (3) the discrimination is proposed in good 

faith, and (4) the degree of discrimination is directly related to the basis or rationale for the discrimination. In re Ambanc 

La Mesa Ltd. P’ship, 115 F.3d 650, 656 (9th Cir. 1997). When applying the standard, courts may consider the extent of the 

benefit conferred by the members of the class benefitting from any proposed discrimination (i.e. whether they are critical or 

necessary to the success of the reorganization) and whether the extent of the benefit justifies the discrimination proposed. 

In re Rexford Props. LLC, 558 B.R. 352, 365 (Bankr. C.D. Cal. 2016). 

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to account for risk, variability, and inflation of asserted claim amounts. Holders of Wildfire Claims who 

do not vote to accept the Plan (“Opt-Out Wildfire Claimants”) will have the allowed amount of their 

claims determined in accordance with the procedures of the Wildfire Claims Trust, subject to the 

aggregate cap set by the estimation proceedings in the Bankruptcy Court and/or District Court, as 

appropriate. Opt-Out Wildfire Claimants can settle their claims, agree to binding arbitration, or, solely 

with respect to personal injury torts or wrongful death claims, have the allowed amounts of their claims 

determined in jury trials pursuant to 28 U.S.C. § 157(b)(5). 

40. The Tort Committee and Ad Hoc Subrogation Group’s arguments concerning estimation 

are both premature and unfounded, for at least the following reasons.10 First, the Tort Committee appears 

to concede, as it must, that, at a minimum, the District Court can properly estimate the claims at issue 

here. TCC Objection, 5, 7. Second, courts in chapter 11 bankruptcies involving mass tort claims – in 

both asbestos litigation and other mass tort proceedings – consistently find that estimation is required 

because trying individual claims will unduly delay administration of the bankruptcy. Third, it is legally 

permissible and appropriate to use estimation proceedings to determine and potentially cap the aggregate 

amount necessary to pay claims, including personal injury tort and wrongful death claims even where 

causation is disputed and over the dissent of tort claimants. In re Dow Corning Corp., 244 B.R. 721, 

732-33 (Bankr. E.D. Mich. 1999), rev’d on other grounds, 255 B.R. 445 (E.D. Mich. 2000), aff’d and 

remanded, 280 F.3d 648 (6th Cir. 2002); In re Dow Corning Corp., 215 B.R. 346, 352 (Bankr. E.D. 

Mich.), supplemented, 215 B.R. 526 (Bankr. E.D. Mich. 1997). 

41. Lastly, the Tort Committee contends that the Ad Hoc Committee Proposal both 

improperly classifies wildfire claims and unfairly discriminates against them in comparison to the claims 

of unsecured notes, which are of the same priority. With respect to the classification argument, this can 

easily be remedied by separately classifying categories of wildfire claims, as necessary, in a formal plan. 

The Tort Committee’s unfair discrimination argument is without merit. As stated above, discrimination 

in a plan can be permissible if it is supported by an appropriate justification. See ¶ 37 & n.9, supra. The 

10 The Ad Hoc Committee’s arguments, and case law in support, are addressed in greater detail in the Ad Hoc 

Committee’s Joinder to the Objection of the Official Committee of Unsecured Creditors to Motions of (i) Ad Hoc Group of 

Subrogation Claim Holders and (ii) Official Committee of Tort Claimants for Relief from Automatic Stay [Docket No. 

3106].

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Ad Hoc Committee Proposal sets forth a procedure that provides for payment of wildfire claims up to 

the full estimated, allowed amount. Any difference in timing of payment and procedure for paying 

claims is clearly justified by the difference in nature of the liquidated, funded debt claims and 

unliquidated, contingent litigation claims. 

C. The Court Should Not Grant A Blanket Termination of Exclusivity 

42. Despite the fact that the Ad Hoc Committee seeks only termination of exclusivity as to 

itself to file its plan of reorganization, the Debtors contend that termination of exclusivity will result in 

“chaos” and that “degradation in enterprise value” will “necessarily ensue.” Debtor Objection, 8:19-21. 

The Shareholder Group also contends, similarly, that terminating exclusivity will “open the floodgates 

to any number of unconfirmable plans.” Shareholder Group Objection, 8:19-20. While multiple parties 

have, in fact, requested the blanket termination of exclusivity of all parties, the Court maintains the 

discretion to fashion the appropriate relief in these cases. See In re United Press Int’l, Inc., 60 B.R. 265, 

271 (Bankr. D.D.C. 1986) (describing “middle path” of limited termination of exclusivity, which is not 

expressly prohibited by the Bankruptcy Code). The appropriate mechanism for balancing the interest of 

moving these cases forward and allowing parties to have their proposals considered, but also to prevent 

so-called “nonplans and tirekickers” is to require any party that wishes to file its own plan to make a 

motion to terminate exclusivity supported by a term sheet outlining the material terms of its plan, which 

can be heard and considered on an expedited basis. If the Court determines that the proposal sets forth 

a credible, confirmable plan, the Court can then terminate exclusivity as to that party. The Ad Hoc 

Committee is confident that the Court can maintain order and avoid “chaos” in the event exclusivity is 

terminated. 

43. This procedure is consistent with the Court’s practice and prior experience in the first 

PG&E bankruptcy. As the Court is aware, in the prior case, the Court entered an order on February 2, 

2002, granting the Utility an extension of exclusivity to June 30, 2002, except that with respect to the 

CPUC, the Court ordered that exclusivity was extended to the earlier of (i) June 30, 2002 or (ii) such 

time as the Court made a determination as to whether to authorize CPUC to file a competing plan of 

reorganization. In re Pac. Gas & Electric Co., No. 01-30923 (DM) (Bankr. N.D. Cal. 2001) [Docket 

No. 4580]. The order directed the CPUC to file a term sheet for its contemplated plan by February 13, 

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2002. Id. The CPUC complied with the order and filed its term sheet, and the Court held a subsequent 

hearing on February 27, 2002. After determining that the CPUC had made a credible plan proposal, the 

Court terminated exclusivity only as to the CPUC to allow it to file its competing plan. In re Pac. Gas 

& Electric Co., No. 01-30923 (DM) (Bankr. N.D. Cal. 2001) [Docket No. 5155]. 

44. Several parties have incorrectly suggested that the Utility’s exclusivity in the first PG&E 

case was simply “allowed to expire” with respect to the CPUC, or that the Court declined to grant the 

Utility’s motion for a further extension. Debtor Objection, n.3; Subrogation Group Objection, 12:15-

18. This is simply not true. The Court required an affirmative showing from the party seeking to file its 

plan that a limited termination of exclusivity was warranted. The Court can impose such a requirement 

again here. 

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CONCLUSION 

45. It is now approximately eleven months until June 30, 2020. The Ad Hoc Committee 

Proposal is the only credible plan proposal that is currently before this Court. The termination of the 

Debtors’ Exclusive Periods to pursue a plan of reorganization based on the Ad Hoc Committee Proposal 

will clearly move these cases forward. The Ad Hoc Committee stands ready, able and willing to engage 

with all parties in an effort to arrive at a consensual plan of reorganization, which will undoubtedly 

benefit all stakeholders and give the Debtors the best chance of exiting chapter 11 on or before June 30, 

2020. For the foregoing reasons and the reasons set forth in the Motion, the Ad Hoc Committee 

respectfully requests that the Court grant the Motion and enter an order terminating the Debtors’ 

Exclusive Periods to permit the Ad Hoc Committee to file and solicit acceptances of a plan of 

reorganization. 

Dated: July 23, 2019 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 

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7/22/2019 How electrical workers view hedge fund fight for PG&E control

https://calmatters.org/commentary/pge-control/ 1/6

COMMENTARY ENVIRONMENT MY TURN

As hedge funds’ fight for control of PG&E, here is

how workers see it

BY GUEST COMMENTARY 

PUBLISHED: JULY 12, 2019

A fight is on between hedge funds for control of PG&E. Photo by Ray Chavez/Bay Area News Group.

By Tom Dalzell, Special to CalMatters

Case: 19-30088 Doc# 3143 Filed: 07/23/19 Entered: 07/23/19 09:00:34 Page 31

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7/22/2019 How electrical workers view hedge fund fight for PG&E control

https://calmatters.org/commentary/pge-control/ 2/6

As the elected leader of the International Brotherhood of Electrical Workers Local 1245, which

represents approximately 12,000 frontline utility workers at Pacific Gas & Electric Co., I have paid

careful attention both to legislative activity in Sacramento and to PG&E’s bankruptcy proceeding.

Our members work around the clock to deliver clean, safe and reliable gas and electricity to PG&E’s

customers. As such, we are uniquely positioned to observe and evaluate the policies and

proceedings that stand to impact the utility, its employees, and the millions of residents and

businesses they serve.

Several months ago, a consortium of hedge funds that owns a large percentage of PG&E’s stock

replaced PG&E’s existing board of directors with a new board, which included several direct

representatives of hedge funds. Traditional institutional investors are no longer running PG&E.

Hedge funds are.

And in the last few days, there has been much criticism of a reorganization plan that was put

forward by another group in bankruptcy court. That other group also includes hedge funds. But

those hedge funds own PG&E bonds. 

Those who follow finance will appreciate the traditional friction between equity and debt. But from

our perspective, all the hedge funds on the stage at PG&E, be they bondholders or stockholders, are,

in essence, the same creatures. 

They are investors who use high-risk methods in hopes of realizing large capital gains. Whether they

are dealing in equity or debt, these hedge fund operators are all cut from the same cloth. 

The rational thing to do here is to compare all the plans for reorganizing PG&E and weigh the merits

of each. However, as things stand today, there is only one viable plan for reorganization, and that is

the one put forward by the bondholders, as the plan articulated several weeks ago by the

shareholder hedge funds has dissolved to all but nothing. 

Logo of CalMatters

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7/22/2019 How electrical workers view hedge fund fight for PG&E control

https://calmatters.org/commentary/pge-control/ 3/6

WE WANT TO HEAR FROM YOU

Want to submit a guest commentary or reaction to an article

we wrote? You can find our submission guidelines here. Please

The equity plan for reorganization was based on assumptions that have not proven feasible. 

First, the equity plan assumed that PG&E could issue tax-free bonds based on future profits.

Legislation is required to realize that goal, and that doesn’t strike us as likely in the existing

political climate. 

Second, the equity plan assumed that PG&E could issue tax-free bonds based on $5 billion in

cost savings achieved over the next 10 years. When it was pointed out that those savings

belong to ratepayers, not the shareholders, that part of the plan collapsed.

The bondholder plan may not be perfect, but it is the only plan that is currently publicly available

and politically feasible. 

I am sure that the hedge funds that control PG&E will develop a revised plan for reorganization. I

look forward to seeing it, and I look forward to seeing plans that others might develop. Then, and

only then, can we do a rational comparison of plans. 

For the time being, our members will do their jobs, providing critical electric and gas service to

millions of Californians. 

These dedicated men and women are highly skilled and proud of their work, and we are steadfastly

committed to ensuring they do not become collateral damage in the course of these proceedings. 

We do not have the luxury of doing without hedge funds today, but as Mavis Staples urged us, let’s

keep our eyes on the prize – clean, safe, affordable energy for California.

—

Tom Dalzell is business manager of IBEW Local 1245, which represents PG&E workers,

info@ibew1245.com. He wrote this commentary for CalMatters.

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