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UNITED STATES BANKRUPTCY COURT

NORTHERN DISTRICT OF CALIFORNIA

In re: 

PG&E CORPORATION,

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PACIFIC GAS AND ELECTRIC COMPANY,

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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Bankruptcy Case

No. 19-30088-DM

Chapter 11

Jointly Administered

Date: December 11, 2019

Time: 10:00 AM

Place: Courtroom 17

450 Golden Gate Ave.

16th Floor

 San Francisco, CA

ORDER RE TIME ALLOWANCES FOR HEARING AND QUESTIONS FOR COUNSEL

ON ISSUE OF POST-PETITION INTEREST

On December 11, 2019, at 10:00 AM, the court will conduct a 

hearing on the proper post-petition interest to apply under the 

Debtors’ proposed Plan of Reorganization (currently the Nov 4, 

2019, draft, Dkt. No. 4564). The Debtors, joined by PG&E 

Shareholders and others aligned with them, will have forty-five 

minutes, to be shared as their counsel agree, and including time 

Signed and Filed: December 9, 2019

________________________________________

DENNIS MONTALI

U.S. Bankruptcy Judge

Entered on Docket 

December 09, 2019

EDWARD J. EMMONS, CLERK 

U.S. BANKRUPTCY COURT 

NORTHERN DISTRICT OF CALIFORNIA

Case: 19-30088 Doc# 5024 Filed: 12/09/19 Entered: 12/09/19 12:26:07 Page 1 of

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for rebuttal. The Official Committee of Unsecured Creditors, 

the Ad Hoc Committee of Senior Unsecured Noteholders and others 

aligned with them will also have forty-five minutes, to be 

shared as their counsel agree.

Counsel should be prepared to address the following to 

assist the court:

Pre-petition unsecured non-priority creditors (excluding 

Wildfire claimants) are placed into classes 3A, 3B, 4A and 4B. 

Some claimants assert contractual claims providing for interest 

ABOVE the applicable federal judgment rate. Some assert

contractual claims providing for interest BELOW the applicable 

federal judgment rate. See, Dkt. No. 4624, at 2:8: 2.45% vs 

federal judgment rate of 2.59%. Some may assert claims based 

upon contracts providing NO or some other rate of interest. See, 

Id., at 2:4-17. Some may assert claims based on pre-petition 

judgments entitled to post-judgment interest per state law 

(assume California). And some may assert unliquidated tort 

claims.

What is the proper post-petition, pre-confirmation rate of 

interest to apply to those four classes? The choices are the 

contract rates, if there are any, or the federal judgment rate. 

Debtors’ opponents need to tell the court why it should, or even 

may, reject Cardelucci’s one-size-fits-all approach of using the 

same rate for all of the interest claims. This approach avoids 

the problem the decision warns of, namely figuring out the 

correct rate to apply unevenly with each class, or even within 

each class, where equality of treatment appears as one of the 

bankruptcy code’s goals.

Case: 19-30088 Doc# 5024 Filed: 12/09/19 Entered: 12/09/19 12:26:07 Page 2 of

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Those creditors also question the application of 11 U.S.C. 

§ 726(a)(5) at all. But if that section is disregarded, doesn’t 

11 U.S.C. § 502(b)(2) dictate an even less attractive 

alternative? 

The issue appears confined principally to the “gap” between 

the petition date, January 29, 2019, and the effective date of 

the plan (assume June 30, 2020) Id at 1:8-9. Classes 3A, 4A and 

4B will be paid in full, so post-effective date interest is a 

non-issue. See, Dkt. No. 4634 at 4:13-14. But Class 3B’s 

treatment will be modified if Debtors’ argument fails, so the 

court will need to determine what rate applies to that class 

until it is paid in full. Debtors will need to explain how 

Cardelucci extends beyond the gap. If not, what rate does

apply?

Both sides need to explain why it matters whether a class

is IMPAIRED or UNIMPAIRED. Ultra II appears to settle the issue 

in the Fifth Circuit that impairment or unimpairment are 

concepts driven by 11 U.S.C. § 1124’s focus on what the plan 

does or does not do, not what the bankruptcy code does. PPI

agrees that 11 U.S.C. § 502(b)(2) is the culprit. There the 

creditor claiming to be impaired complained about the loss of 

state law, pre-bankruptcy entitlements, but the court upheld the 

operation of the bankruptcy code’s limitation of those rights, 

not the debtor’s plan. This court finds it hard to imagine that 

the Ninth Circuit would go the other way and conclude that the 

plan here is the source of the Debtors’ assertion of generally 

lower post-petition interest entitlements. Equally hard to 

imagine is that creditors whose contract rates of interest are 

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LOWER than the federal judgment rate would be pleased with an 

even lower rate. How is that explained?

Finally, the creditors pressing for gap contract interest 

need to explain why there should be any discussion of fair and 

equitable under 11 U.S.C. § 1129(b). Under 11 U.S.C. § 1126(f), 

unimpaired classes are deemed to have accepted the plan. Thus 

section 1129(b) is not an option for them to invoke.

***END OF ORDER***

Case: 19-30088 Doc# 5024 Filed: 12/09/19 Entered: 12/09/19 12:26:07 Page 4 of

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