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LABATON SUCHAROW LLP

Thomas A. Dubbs

Louis Gottlieb

Carol C. Villegas

Jeffrey A. Dubbin

140 Broadway

New York, New York 10005

LOWENSTEIN SANDLER LLP

Michael S. Etkin

Andrew Behlmann

One Lowenstein Drive

Roseland, New Jersey 07068

Lead Counsel to Lead Plaintiff and the 

Proposed Class

Bankruptcy Counsel to Lead Plaintiff

and the Proposed Class

MICHELSON LAW GROUP

Randy Michelson, Esq. (SBN 114095)

220 Montgomery Street, Suite 2100

San Francisco, California 94104

Bankruptcy Counsel to Lead Plaintiff

and the Proposed Class

UNITED STATES BANKRUPTCY COURT

NORTHERN DISTRICT OF CALIFORNIA

SAN FRANCISCO DIVISION

In re:

PG&E CORPORATION

- and –

PACIFIC GAS AND ELECTRIC 

COMPANY,

Debtors.

Case No. 19-30088 (DM) (Lead Case)

Chapter 11

(Jointly Administered)

☒ Affects Both Debtors

☐ Affects PG&E Corporation

☐ Affects Pacific Gas and Electric Company

DECLARATION OF TY R. SAGALOW

PURSUANT TO 28 U.S.C. § 1746 IN 

SUPPORT OF SECURITIES LEAD 

PLAINTIFF’S LIMITED OBJECTION TO 

FOURTH MONTHLY FEE STATEMENT 

OF SIMPSON THACHER & BARTLETT 

LLP FOR ALLOWANCE AND PAYMENT 

OF COMPENSATION AND 

REIMBURSEMENT OF EXPENSES FOR 

THE PERIOD OF JULY 1, 2019 THROUGH 

JULY 31, 2019 [ECF NO. 4032]

Case: 19-30088 Doc# 4351-1 Filed: 10/21/19 Entered: 10/21/19 13:44:09 Page 1

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I, Ty R. Sagalow, pursuant to 28 U.S.C. § 1746, declare as follows: 

I. Scope of Assignment 

1. I was asked by counsel for Public Employees Retirement Association of New 

Mexico (“Lead Plaintiff”), the court-appointed lead plaintiff in the securities class action captioned 

as In re PG&E Corporation Securities Litigation, Case No. 3:18-cv-03509-RS (N.D. Cal.) (the 

“Securities Litigation”), on behalf of itself and the proposed class it represents in the Securities 

Litigation, together with York County on behalf of the County of York Retirement Fund, City of 

Warren Police and Fire Retirement System, and Mid-Jersey Trucking Industry & Local No. 701 

Pension Fund, to opine on directors’ and officers’ (“D&O”) liability insurance coverage in the 

context of requests for payment by the above-captioned debtors in possession (the “Debtors”) of 

the legal fees and expenses of Simpson Thacher & Bartlett LLP (“Simpson Thacher”) on behalf 

of certain of the Debtors’ current and former independent directors who are defendants in the 

Securities Litigation (the “Independent Director Defendants”).

2. In connection with this analysis, I have reviewed (a) the Fourth Monthly Fee 

Statement of Simpson Thacher & Bartlett LLP for Allowance and Payment of Compensation and 

Reimbursement of Expenses for the Period of July 1, 2019 Through July 31, 2019 (the “Fourth Fee 

Statement”) [ECF No. 4032] filed by Simpson Thacher, and (b) Lead Plaintiff’s objection to the 

Fourth Fee Statement (the “Objection”). I have also reviewed two primary D&O policies issued 

by Associated Electric Gas Insurance Services Ltd. to Debtors that I understand are at issue in this 

action: (1) policy number DP008417P for the policy period from May 20, 2017 to May 20, 2018 

and (2) policy number DP008418P for the policy period from May 20, 2018 to May 20, 2019 (the 

“D&O Policies”).

II. Qualifications

3. In my more than 35 years of professional experience, I have developed an expertise 

in D&O insurance.

4. I spent most of my career at AIG Executive Liability (formerly National Union Fire 

Insurance Company of Pittsburgh, PA), the world’s largest carrier of D&O insurance. I held 

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various positions with AIG, including Chief Operating Officer of AIG eBusiness Risk Solutions, 

President of AIG Product Development, Chief Underwriting Officer, and General Counsel.

5. As General Counsel, I personally wrote, or led teams that wrote, all of the D&O 

policies and many of the professional liability policies that AIG produced between 1988 and 2000. 

As AIG Executive Liability’s Chief Underwriting Officer, I was charged with all underwriting 

interpretations and decisions for AIG D&O policies.

6. Following AIG, I headed up a team that rewrote all D&O policies for Zurich North 

America.

7. In 2015, I became a founding member of Lemonade Group, its founding Chief 

Insurance Officer and founding Chief Executive Officer of Lemonade Insurance 

Company. Lemonade is the first licensed and regulated InsureTech insurance company in the 

United States. I continue to serve on the Board of Directors of the Lemonade Insurance Company.

8. I am currently Chief Executive Officer of the Innovation Insurance Group LLC, an 

insurance consulting firm and insurance brokerage firm I founded in 2012.

9. I graduated summa cum laude from Long Island University and cum laude from 

Georgetown University Law Center, and earned an LLM from New York University School of 

Law.

III. The D&O Policies and Other Materials Reviewed

10. Based on my review, I understand that the D&O Policies provide, as is typical in 

most primary D&O insurance policies, (a) “Side A D&O Coverage” to the Independent Director 

Defendants and other director and officer defendants in the Securities Litigation (together with the 

Independent Director Defendants, the “Individual Defendants”), for losses that the Debtors do not 

indemnify; (b) “Side B D&O Coverage” to the Debtors, for losses they incur indemnifying the 

Individual Defendants; and (c) “Side C D&O Coverage” to the Debtors, for losses they incur on 

account of securities claims made directly against them.

11. Consistent with industry practice, both D&O Policies contain “Priority of 

Payments” provisions that provide that the insurer must pay claims under Side A D&O Coverage 

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first, and can pay Side B D&O Coverage and Side C D&O Coverage “only if and to the extent the 

payment under [Side A D&O Coverage] does not exhaust the applicable Limit of Liability.” The 

D&O Policies confirm that the priority of Side A D&O Coverage over Side B D&O Coverage and 

Side C D&O Coverage remains the same in the event the Insured Organization enters into Chapter 

11 proceedings: “[i]f Directors or Officers incur Ultimate Net Loss covered under [Side A D&O 

Coverage], the Insured Organization, including any bankruptcy trustee, debtor-in-possession or 

any other successor of the Insured Organization, shall have no interest in or claim for any payments 

under this Policy until all such Ultimate Net Loss is paid in full by the Insurer.” 

IV. Purposes of Side A D&O Coverage

12. In my career, I have drafted numerous D&O policies to address the possibility of 

bankruptcy and to confirm that individual directors and officers will have direct access to the 

insurance policies in the event that the Company is precluded as a matter of law from providing 

indemnification to those individuals.

13. One of the industry’s most articulated primary purposes of D&O insurance is to 

protect individual corporate directors and officers against lawsuits and claims arising from their 

conduct as directors and officers. Based on my more than 35 years of professional experience and 

the express terms of the D&O Policies (including the Priority of Payments provisions), it appears 

that the D&O Policies are drafted to ensure that, in the event of bankruptcy, the proceeds of the 

D&O policies would remain available for the individual directors and officers until all claims 

under the Side A D&O Coverage are paid in full. This concept would apply to the benefit of the 

Individual Defendants, including to directly pay defense costs such as those sought by Simpson 

Thacher from the Debtors in connection with the Securities Litigation, to the extent reasonable and 

necessary, whether through the Fourth Fee Statement or otherwise. 

14. Lead Plaintiff argues in the Objection that the Debtors are, as a matter of law, 

prohibited for various reasons from indemnifying the Individual Defendants for their defense costs 

in the Securities Litigation. (Indeed, in my more than 35 years of professional experience, other 

than pre-packaged bankruptcies, I do not recall ever seeing a chapter 11 debtor provide postCase: 19-30088 Doc# 4351-1 Filed: 10/21/19 Entered: 10/21/19 13:44:09 Page 4

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petition indemnification to individual directors and officers in connection with the defense of 

securities litigation arising from entirely pre-petition conduct.) Assuming Lead Plaintiff’s 

argument is correct, the Side A D&O Coverage exists to provide and should provide, and the D&O 

Policies require the insurers to provide, first-dollar coverage for direct payment of such fees to the 

extent reasonable and necessary.

I declare under penalty of perjury under the laws of the United States of America that the 

foregoing is true and correct.

Executed on October 21, 2019

________________________________

Ty R. Sagalow

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