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DIEMER & WEI, LLP

Kathryn S. Diemer (#133977)

100 West San Fernando Street, Suite 555

San Jose, CA 95113

Telephone: 408-971-6270 

Facsimile: 408-971-6271

Email: kdiemer@diemerwei.com 

WILLKIE FARR & GALLAGHER LLP

Matthew A. Feldman (pro hac vice)

Joseph G. Minias (pro hac vice)

Daniel I. Forman (pro hac vice)

787 Seventh Avenue

New York, NY 10019-6099

Telephone: (212) 728-8000

Facsimile: (212) 728-8111

Email: mfeldman@willkie.com

jminias@willkie.com

dforman@willkie.com

Counsel for Ad Hoc Group of Subrogation Claim Holders

UNITED STATES BANKRUPTCY COURT

NORTHERN DISTRICT OF CALIFORNIA

SAN FRANCISCO DIVISION

In re:

PG&E CORPORATION,

-andPACIFIC 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)

Chapter 11 

Bankr. Case No. 19-30088 (DM)

(Jointly Administered)

OBJECTION OF THE AD HOC GROUP OF 

SUBROGATION CLAIM HOLDERS TO THE 

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

Date: October 7, 2019 

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

Place: United States Bankruptcy Court

 Courtroom 17, 16th Floor

 San Francisco, CA 94102

Case: 19-30088 Doc# 4102 Filed: 10/04/19 Entered: 10/04/19 09:30:39 Page 1 of

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The Ad Hoc Group of Subrogation Claim Holders (the “Ad Hoc Subrogation Group”) in 

the above-captioned chapter 11 cases of PG&E Corporation and Pacific Gas and Electric Company 

(together, “PG&E” or the “Debtors”), by its attorneys Willkie Farr & Gallagher LLP and Diemer &

Wei, LLP, hereby objects (the “Objection”) to the 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 [Docket No. 3940] (the 

“Joint Motion”). In support of this Objection, the Ad Hoc Subrogation Group respectfully 

represents as follows:

OBJECTION

At the hearing on September 24th, counsel to the Ad Hoc Committee of Senior Unsecured 

Noteholders (the “Bondholders”) represented to the Court that the Bondholders’ revised proposal 

(the “Bondholders’ Plan” as described in the term sheet filed September 25, 2019 [Docket No. 

4006]) would treat the claims of the Ad Hoc Subrogation Group the same as the Debtors’ First 

Amended Joint Chapter 11 Plan of Reorganization [Docket No. 3966] (the “First Amended Plan”). 

Sept. 24 Hr’g Tr. at 111:22-114:19. Despite this clear statement to the Court, the Bondholders’ Plan 

falls decidedly short of doing so. As the Court knows, the settlement between the Debtors and the 

Ad Hoc Subrogation Group embodied in the First Amended Plan (the “Subrogation Settlement”) 

provides for an $11 billion allowed claim, which will be paid entirely in cash on the plan effective 

date (subject only to the claimholder’s right to elect equity instead of cash). First Amended Plan, 

Section 4.19(b). The Bondholders’ Plan, in contrast, offers an unknown mix of cash and equity 

consideration, likely worth substantially less than the $11 billion in cash that would be realized

through the Subrogation Settlement (approximately a billion dollars of value less).

The math illustrating the material discrepancy is as follows: 

• The Bondholders’ amended term sheet earmarks $12.75 billion in cash and 40.6% of 

reorganized PG&E common stock for fire victims and holders of subrogation claims 

(the “Fire Claimants’ Consideration”).

• The 40.6% of reorganized PG&E common stock is ascribed a value of $12.75 billion 

Case: 19-30088 Doc# 4102 Filed: 10/04/19 Entered: 10/04/19 09:30:39 Page 2 of

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at “plan value.” [Docket No. 4006], 5. As illustrated on Exhibit A to this Objection

however, plan value is premised on a $61 billion total enterprise value. 

• Bondholders, on the other hand, are purchasing 59.3% of reorganized PG&E’s 

common stock for approximately $15.5 billion, implying a $55.9 billion total 

enterprise value.

In sum, Bondholders would acquire a 59.3% share of equity at a substantial discount to the 

hypothetical plan value used to value the Fire Claimants’ Consideration. As further illustrated on 

Exhibit A, assuming a 50/50 split of cash and equity to all fire claimants, the “$11 billion” of value 

earmarked for holders of subrogation claims is actually worth $10.1 billion—a difference of almost 

a billion dollars when compared to the Debtor’s First Amended Plan.1

 Thus, any attempt to portray 

the Bondholder Plan as offering the holders of subrogation claims the precise amount that the Debtors 

propose to settle such claims is plainly wrong; and the Bondholder Plan is not likely to avoid plan 

litigation with the Ad Hoc Subrogation Group. Therefore, the Ad Hoc Subrogation Group does not 

believe modifying exclusivity at this time advances everyone’s shared goal: a consensual plan that 

provides individual claimants payment consistent with the provisions of A.B. 1054.

1 Additionally, under the Bondholders’ Plan subrogation claims relating to the 2015 Butte fire recover from the 

same pool of assets, while under the Debtors’ First Amended Plan these claims are not subject to the Subrogation 

Settlement. Furthermore, just as the amount of distributable value actually available for holders of subrogation 

claimants is materially less than the $11 billion headline number, it follows that the amount of distributable 

value available for individual claimants is also overstated. 

Case: 19-30088 Doc# 4102 Filed: 10/04/19 Entered: 10/04/19 09:30:39 Page 3 of

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CONCLUSION

WHEREFORE, the Ad Hoc Subrogation Group requests that the Court deny the Joint 

Motion and such other and further relief as the Court may deem just and proper.

Dated: October 4, 2019

Counsel for Ad Hoc Group of Subrogation Claim Holders

WILLKIE FARR & GALLAGHER LLP

/s/ Matthew A. Feldman

Matthew A. Feldman (pro hac vice)

Joseph G. Minias (pro hac vice)

Daniel I. Forman (pro hac vice)

787 Seventh Avenue

New York, NY 10019-6099

Telephone: (212) 728-8000

Facsimile: (212) 728-8111

Email: mfeldman@willkie.com

jminias@willkie.com

dforman@willkie.com

DIEMER & WEI, LLP

Kathryn S. Diemer (#133977)

100 West San Fernando Street, Suite 555

San Jose, CA 95113

Telephone: (408) 971-6270 

Facsimile: (408) 971-6271 

Email: kdiemer@diemerwei.com

Case: 19-30088 Doc# 4102 Filed: 10/04/19 Entered: 10/04/19 09:30:39 Page 4 of

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Exhibit A

Case: 19-30088 Doc# 4102 Filed: 10/04/19 Entered: 10/04/19 09:30:39 Page 5 of

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Exhibit A

Implied Total Enterprise Value ("TEV") calculations based on Bondholders' Plan terms

Implied TEV calculation Implied Equity Value calculation

($ in millions) New Money Plan New Money Plan

Investment Value Investment Value

Utility reinstated debt $15,775 $15,775 New money investment ($) $15,512

Utility new money secured debt 7,979 7,979 Trust equity value ($) 12,750

Utility reinstated preferred 258 258 ÷ pro forma ownership % 59.3% 40.6%

HoldCo new money debt 5,750 5,750 Implied Equity Value $26,159 $31,404

Total debt $29,762 $29,762

New money equity value (59.3%) $15,512 $18,623

Wildfire trusts equity value (40.6%) 10,621 12,750

Legacy equity value (0.1%) 26 31

Implied Equity Value $26,159 $31,404

Implied TEV $55,921 $61,166

Memo: Implied Subrogation Trust value 

Consideration mix

50% equity / 50% cash $10,081 $11,000

Bondholders’ Plan does not describe the exact mix of 

consideration that will be funded into the Subrogation Trust

Case: 19-30088 Doc# 4102 Filed: 10/04/19 Entered: 10/04/19 09:30:39 Page 6 of

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