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WEIL, GOTSHAL & MANGES LLP 

Stephen Karotkin (pro hac vice) 

(stephen.karotkin@weil.com) 

Ray C. Schrock, P.C. (pro hac vice) 

(ray.schrock@weil.com) 

Jessica Liou (pro hac vice) 

(jessica.liou@weil.com) 

Matthew Goren (pro hac vice) 

(matthew.goren@weil.com) 

767 Fifth Avenue 

New York, NY 10153-0119 

Tel: 212 310 8000 

Fax: 212 310 8007 

KELLER & BENVENUTTI LLP 

Tobias S. Keller (#151445) 

(tkeller@kellerbenvenutti.com) 

Jane Kim (#298192) 

(jkim@kellerbenvenutti.com) 

650 California Street, Suite 1900 

San Francisco, CA 94108 

Tel: 415 496 6723 

Fax: 650 636 9251 

Attorneys for Debtors 

and Debtors in Possession 

CRAVATH, SWAINE & MOORE LLP 

Paul H. Zumbro (pro hac vice) 

(pzumbro@cravath.com) 

Kevin J. Orsini (pro hac vice) 

(korsini@cravath.com) 

Omid H. Nasab (pro hac vice) 

(onasab@cravath.com) 

825 Eighth Avenue 

New York, NY 10019 

Tel: 212 474 1000 

Fax: 212 474 3700 

UNITED STATES BANKRUPTCY COURT 

NORTHERN DISTRICT OF CALIFORNIA 

SAN FRANCISCO DIVISION 

In re: 

PG&E CORPORATION,

 - and - 

PACIFIC GAS AND ELECTRIC 

COMPANY,

Ch. 11 Lead Case No. 19-30088 (DM) (Jointly Admin.)

DEBTORS’ MOTION PURSUANT TO 11 U.S.C. 

§§ 363(b) AND 105(a) AND FED. R. BANKR. P. 6004 

AND 9019 FOR ENTRY OF AN ORDER 

(I) AUTHORIZING THE DEBTORS AND TCC TO 

ENTER INTO RESTRUCTURING SUPPORT 

AGREEMENT WITH THE TCC, CONSENTING 

FIRE CLAIMANT PROFESSIONALS, AND 

SHAREHOLDER PROPONENTS, AND 

(II) GRANTING RELATED RELIEF 

(THE “TORT CLAIMANTS RSA MOTION”) 

Date: December 17, 2019 

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

Place: U.S. Bankruptcy Court, Courtroom 17, 16th Fl. 

 San Francisco, CA 94102 

Objection Deadline: December 13, 2019, 4:00 p.m. (PT)

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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PG&E Corporation (“PG&E Corp.”) and Pacific Gas and Electric Company 

(the “Utility”), as debtors and debtors in possession (collectively, “PG&E” or the “Debtors”) in the 

above-captioned chapter 11 cases (the “Chapter 11 Cases”), hereby submit this Motion (the “Motion”), 

pursuant to sections 363(b) and 105(a) of title 11 of the United States Code (the “Bankruptcy Code”) 

and Rules 6004 and 9019 of the Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”), for 

entry of an order (i) authorizing the Debtors and the Official Committee of Tort Claimants (the “TCC”)

to enter into and perform under that certain Restructuring Support Agreement, dated as of December 6, 

2019 (the “Tort Claimants RSA”), among the Debtors, the TCC, the Consenting Fire Claimant 

Professionals (as defined below), and the Shareholder Proponents (as defined below) parties thereto, a 

copy of which is annexed hereto as Exhibit A, and (ii) granting related relief. 

In support of the Motion, the Debtors submit the Declaration of Jason Wells (the “Wells 

Declaration”), filed contemporaneously herewith. A proposed form of order granting the relief 

requested herein is annexed hereto as Exhibit B (the “Proposed Order”). 

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TABLE OF CONTENTS 

Page 

Preliminary Statement ...................................................................................................................8

Jurisdiction ..................................................................................................................................10

Background .................................................................................................................................10

Material Terms of the Tort Claimants RSA and Term Sheet .....................................................11

Basis for Relief Requested ..........................................................................................................16

1. The Tort Claimants RSA and Term Sheet Represent a Substantial Achievement and 

Milestone in the Chapter 11 Cases, Are a Sound Exercise of the Debtors’ Business 

Judgment, and Should be Approved Pursuant to Sections 363(b) and 105(a) of the 

Bankruptcy Code. ...........................................................................................................16

2. Entry into the Tort Claimants RSA is in the Best Interests of the Debtors’ Estates and 

Should be Approved Pursuant to Bankruptcy Rule 9019. ..............................................20

3. The Plan Support Terms of the Tort Claimants RSA are Reasonable and Customary. ..23

4. Conclusion ......................................................................................................................24

Notice ..........................................................................................................................................24

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TABLE OF AUTHORITIES 

 Page(s) 

Cases 

Air Line Pilots Ass’n, Int’l v. Am. Nat’l Bank & Trust Co. (In re Ionosphere Clubs, 

Inc.), 

156 B.R. 414 (S.D.N.Y. 1993), aff’d 17 F.3d 600 (2d Cir. 1993) .............................................. 21-22 

In re ASARCO, L.L.C., 

650 F.3d 593 (5th Cir. 2011) ............................................................................................................17 

In re AWTR Liquidation Inc., 

548 B.R. 300 (Bankr. C.D. Cal. 2016) ..............................................................................................17 

In re CHC Grp. Ltd., 

Case No. 16-31854 (BJH) (Bankr. N.D. Tex. Dec. 20, 2016) ..........................................................22 

City Sanitation v. Allied Waste Servs. of Mass., LLC (In re Am. Cartage, Inc.), 

 656 F.3d 82 (1st Cir. 2011). ..............................................................................................................21 

Comm. of Asbestos-Related Litigants v. Johns-Manville Corp. (In re Johns-Manville 

Corp.), 

60 B.R. 612 (Bankr. S.D.N.Y. 1986) ................................................................................................17 

In re Drexel Burnham Lambert Group, Inc., 

134 B.R. 499 (Bankr. S.D.N.Y. 1991) ........................................................................................20, 21 

Energy Future Holdings Corp. v. Del. Trust Co., 

648 F. App’x 277 (3d Cir. 2016) ......................................................................................................21 

In re Exide Techs, 

Case No. 13-11482 (KJC) (Bankr. D. Del. Feb. 4, 2015) ...........................................................18, 24 

In re Federal-Mogul Global Inc., T&N Limited, 

Case No. 01-10578 (JFK) (Bankr. D. Del. Feb. 7, 2007) .................................................................22 

In re Fiddler’s Creek, LLC, 

Case No. 10-3846 (CPM) (Bankr. M.D. Fla. Feb. 25, 2011) ...........................................................22 

In re Indianapolis Downs, LLC., 

486 B.R. 286 (Bankr. D. Del. 2013) .................................................................................................23 

In re Integrated Resources, Inc., 

147 B.R. 650 (Bankr. S.D.N.Y. 1992) ..............................................................................................17 

In re Laser Realty, Inc. v. Fernandez (In re Fernandez), 

2009 Bankr. LEXIS 2846 (Bankr. D.P.R. Mar. 31, 2009)................................................................22 

In re Lionel Corp., 

722 F.2d 1063 (2d Cir. 1983)............................................................................................................17 

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In re Manuel Mediavilla, Inc., 

568 B.R. 551 (B.A.P. 1st Cir. 2017) .................................................................................................23 

Martin v. Kane (In re A&C Properties), 

784 F.2d 1377 (9th Cir. 1986) ....................................................................................................20, 21 

In re Montgomery Ward Holding Corp., 

242 B.R. 147 (D. Del. 1999) .............................................................................................................17 

Motorola, Inc. v. Official Comm. of Unsecured Creditors (In re Iridium Operating 

LLC), 

478 F.3d 452 (2d Cir. 2007)..............................................................................................................22 

Myers v. Martin (In re Martin), 

91 F.3d 389 (3d Cir. 1996)................................................................................................................20 

In re Nautilus Holdings Ltd., 

Case No. 14-22885 (RDD) (Bankr. S.D.N.Y. Oct. 3, 2014) ............................................................22 

Nellis v. Shugrue, 

165 B.R. 115 (S.D.N.Y. 1994) ....................................................................................................20, 21 

In re Pacific Gas and Elec. Co., 

304 B.R. 395 (Bankr. N. D. Cal. 2004) ............................................................................................21 

In re Pacific Gas and Electric Company, 

Case No. 01-30923 (DM) (Bankr. N.D. Cal. Mar. 27, 2002) ............................................... 17-18, 21 

In re Planned Protective Servs., Inc., 

130 B.R. 94 (Bankr. C.D. Cal. 1991) ................................................................................................21 

Port O’Call Invest. Co. v. Blair (In re Blair), 

538 F.2d 849 (9th Cir. 1976) ............................................................................................................21 

Prot. Comm. for Indep. Stockholders of TMT Trailer Ferry, Inc. v. Anderson, 

390 U.S. 414 (1968) ....................................................................................................................20, 21 

In re Residential Capital, LLC, 

2013 Bankr. LEXIS 2601 (Bankr. S.D.N.Y. Jun. 27, 2013).............................................................22 

In re SeraCare Life Sciences, 

Case No. 06-00510 LA11 (Bankr. S.D. Cal. Dec. 21, 2006) ............................................................24 

Smith v. Van Gorkom, 

488 A.2d 858 (Del. 1985) .................................................................................................................17 

In re Thompson, 

965 F.2d 1136 (1st Cir. 1992) ...........................................................................................................21 

In re TK Holdings Inc., 

Case No. 17-11375 (BLS) (Bankr. D. Del. Dec. 13, 2017) ..............................................................18 

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Trans World Airlines, Inc. v. Texaco Inc. (In re Texaco Inc.), 

81 B.R. 813 (Bankr. S.D.N.Y. 1988) ................................................................................................23 

In re Tronox Inc., 

Case No. 09-10156 (ALG) (Bankr. S.D.N.Y. Dec. 23, 2009) ..........................................................18 

In re Walter, 

83 B.R. 14 (B.A.P. 9th Cir. 1988).....................................................................................................17 

In re WCI Cable, Inc., 

282 B.R. 457 (Bankr. D. Or. 2002) ...................................................................................................21 

Woodson v. Fireman’s Fund Ins. Co. (In re Woodson), 

839 F. 2d 610 (9th Cir. 1988) .....................................................................................................20, 21 

Statutes 

11 U.S.C. § 105(a) ............................................................................................................2, 16, 17, 18, 25 

11 U.S.C. § 363 ...........................................................................................................2, 16, 17, 18, 22, 25 

11 U.S.C. § 1107(a) ................................................................................................................................10 

11 U.S.C. § 1108 .....................................................................................................................................10 

28 U.S.C. §§ 157 .....................................................................................................................................10 

28 U.S.C. § 1334 .....................................................................................................................................10 

28 U.S.C. § 1408 .....................................................................................................................................10 

28 U.S.C. § 1409 .....................................................................................................................................10 

AB 1054 ..................................................................................................................8, 9, 10, 11, 14, 15, 16 

California Code of Civil Procedure § 36.5(f) .........................................................................................14 

Internal Revenue Code Section 382 ........................................................................................................13 

Other Authorities 

B.L.R. 5011-1(a) .....................................................................................................................................10 

Cal. Prac. Guide: Corps. (The Rutter Group 2015) Ch. 6–C ..................................................................17 

Fed. R. Bankr. P. 1015(b) .......................................................................................................................10 

Fed. R. Bankr. P. 2002 ............................................................................................................................24 

Fed. R. Bankr. P. 9019 ................................................................................................2, 19, 20, 21, 22, 25 

Fed. R. Bankr. P. 6004 ..............................................................................................................................2 

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Memorandum of Points and Authorities in Support of the Motion of the TCC for Relief 

from Automatic Stay to Permit State Court Jury Trial of 2017 Tubbs Wildfire 

Claims .................................................................................................................................................8 

Order Referring Bankruptcy Cases and Proceedings to Bankruptcy Judges, General 

Order 24 ............................................................................................................................................10 

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MEMORANDUM OF POINTS AND AUTHORITIES 

PRELIMINARY STATEMENT1

The Debtors filed these Chapter 11 Cases with the goal of achieving a fair, equitable, and 

expeditious resolution of billions of dollars in liabilities arising from the 2017 and 2018 Northern 

California fires (including Tubbs) and the 2015 Butte Fire. Today, the Debtors are significantly closer 

to realizing this goal, having reached, with the assistance of the Court-appointed mediator, a third, 

fundamentally important settlement to compromise previously unresolved claims of the last key 

constituency in these Chapter 11 Cases—the individual fire claimants. 

Pursuant to the Tort Claimants RSA among the Debtors, the TCC, the law firms 

representing individuals holding approximately 70% in number of prepetition fire claims filed against 

the Debtors (the “Consenting Fire Claimant Professionals,” as defined in the Tort Claimants RSA), 

and certain funds and accounts managed by Abrams Capital Management, LP and Knighthead Capital 

Management, LLP (the “Shareholder Proponents”), the parties have resolved, among other things, the 

treatment and discharge of individual fire claims under the Debtors’ chapter 11 plan in compliance with 

AB 1054. Pursuant to the Tort Claimants RSA, under the Debtors’ chapter 11 plan, over $36 billion2 in 

asserted prepetition fire liabilities will be resolved through the contribution of cash and stock with an 

aggregate value of $13.5 billion and assignment of certain rights and causes of action to a trust 

established for the benefit of the fire claimants. The settlement is embodied in the Tort Claimants RSA 

and term sheet annexed thereto as Exhibit A (the “Term Sheet”), and will be implemented pursuant to, 

and incorporated in, an amendment to the Debtors’ Joint Chapter 11 Plan of Reorganization, dated 

November 4, 2019 [Docket No. 4564] (as further amended, modified, or supplemented in accordance 

with the terms of the Tort Claimants RSA and Term Sheet, the “Amended Plan”). The Debtors intend 

to file the Amended Plan on or prior to December 12, 2019. The Term Sheet summarizes the treatment 

1

 Capitalized terms used but not herein defined in the preliminary statement shall have the meanings 

ascribed to them in the Tort Claimants RSA, the Term Sheet, or the Plan, as applicable. 

2 See Memorandum of Points and Authorities in Support of the Motion of the TCC for Relief from 

Automatic Stay to Permit State Court Jury Trial of 2017 Tubbs Wildfire Claims, at 4 [Docket No. 

2843] (TCC alleges total insured and uninsured wildfire losses in excess $54 billion, of which $36 

billion are alleged to be underinsured and uninsured claims). 

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of prepetition fire claims that will be set forth in the Amended Plan. The Debtors and the Shareholder 

Proponents will be co-proponents of the Amended Plan. 

The Tort Claimants RSA and Term Sheet are the product of extensive, good faith, arm’slength negotiations and mediation involving multiple parties spanning multiple weeks. Both the Tort 

Claimants RSA and Term Sheet reflect the heavily negotiated resolution of a number of critical, 

substantive issues among the Debtors, the TCC, the Consenting Fire Claimant Professionals, and the 

Shareholder Proponents. These include the following: 

 The Tort Claimants RSA and Term Sheet fully resolve the chapter 11 

plan’s treatment of all prepetition fire claims3 for consideration having 

a value of approximately $13.5 billion. This represents a settlement and 

resolution of the over $36 billion in such claims previously asserted by 

the TCC and its constituency. 

 The Tort Claimants RSA eliminates any reason or basis to continue the 

protracted competing chapter 11 plan process. Under the Tort 

Claimants RSA, the TCC and the Consenting Fire Claimant 

Professionals will support the Amended Plan. The TCC will 

recommend holders of Fire Victim Claims vote to accept the Amended 

Plan, and the Consenting Fire Claimant Professionals will use all 

reasonable efforts to encourage their clients (holding approximately 

70% of the prepetition fire claims) to support and vote in favor of the 

Amended Plan, thereby greatly facilitating the Debtors’ ability to 

successfully and timely emerge from chapter 11 by the June 30, 2020 

confirmation deadline established in AB 1054. Further, upon approval 

of the Tort Claimants RSA, the TCC will withdraw its support and cease 

to be a co-proponent of the Joint Chapter 11 Plan of Reorganization of 

Official Committee of Tort Claimants and Ad Hoc Committee of Senior 

Unsecured Noteholders (including any amended or modified version 

thereof, the “Alternative Plan”). As a result, four major constituencies 

(the TCC and individual fire claimants, the Subrogation Claimants, the 

Public Entities, and the Shareholder Proponents), which represent all the 

impaired classes in these cases, will be fully supportive of one plan—

the Debtors’ Amended Plan. 

 The Tort Claimants RSA eliminates the substantial costs, risks, and 

uncertainties attendant to the estimation of the Fire Victim Claims and 

the Tubbs Cases. 

 With all other classes of claims under the Debtors’ Amended Plan being 

unimpaired, approval of the Tort Claimants RSA will expedite the 

3 This excludes the previously settled Subrogation Wildfire Claims and Public Entities Wildfire 

Claims, but includes federal and state claims asserted by the DOJ, FEMA, and certain California State 

agencies (including Cal OES and CAL FIRE). 

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successful conclusion of the Chapter 11 Cases and distributions to 

holders of Fire Claims. 

The importance of what has been achieved in the Tort Claimants RSA cannot be 

overstated. Having reached a settlement with the TCC and law firms representing an overwhelming 

number of the individual fire claimants, no real obstacles remain to a swift confirmation of the Amended 

Plan and a successful exit from these chapter 11 cases well within the June 30, 2020 deadline established 

under AB 1054. With this third and last critical milestone, and the Debtors’ previously negotiated 

settlements with the holders of Public Entities Wildfire Claims and the Subrogation Wildfire Claims, 

the Debtors’ Amended Plan has the full support and consensus of every necessary constituency to ensure 

the success of these cases, the benefits of the go-forward wildfire fund under AB 1054, and expeditious 

distributions to holders of Fire Claims. 

For all these reasons and as demonstrated below, entry into the Tort Claimants RSA 

represents a sound exercise of the Debtors’ business judgment and easily satisfies all the standards and 

requirements for approval under the Bankruptcy Code. Accordingly, the Tort Claimants RSA should be 

approved. 

JURISDICTION 

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. Feb. 22, 2016), 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”). This is a core proceeding 

pursuant to 28 U.S.C. § 157(b). Venue is proper before the Court pursuant to 28 U.S.C. §§ 1408 and 

1409. 

BACKGROUND 

On January 29, 2019 (the “Petition Date”), the Debtors commenced with the Court 

voluntary cases under chapter 11 of the Bankruptcy Code. The Debtors continue to operate their 

businesses and manage their properties as debtors in possession pursuant to sections 1107(a) and 1108 

of the Bankruptcy Code. No trustee or examiner has been appointed in either of the Chapter 11 Cases. 

The Debtors’ Chapter 11 Cases are being jointly administered for procedural purposes only pursuant to 

Bankruptcy Rule 1015(b). 

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Additional information regarding the circumstances leading to the commencement of the 

Chapter 11 Cases and information regarding the Debtors’ businesses and capital structure is set forth in 

the Amended Declaration of Jason P. Wells in Support of First Day Motions and Related Relief [Docket 

No. 263] (the “Wells First Day Declaration”). 

MATERIAL TERMS OF THE TORT CLAIMANTS RSA AND TERM SHEET 

The treatment and satisfaction of the Fire Victim Claims provided in the Term Sheet will 

be effectuated pursuant to the Amended Plan and, of course, the Amended Plan is subject to confirmation 

and consummation in accordance with the provisions of the Bankruptcy Code. The settlement 

contemplated in the Tort Claimants RSA of the individual Tubbs preference plaintiffs’ claims will be 

effected through negotiated settlement agreements, subject to separate approval by the Bankruptcy 

Court, with any payments with respect to such settled claims to be made after the Amended Plan 

Effective Date by the Fire Victim Trust to be established under the Amended Plan. Likewise, the 

settlement of the estimation proceedings contemplated by the Tort Claimants RSA will be subject to 

approval through a separate motion. The following is a summary of the salient terms of the Tort 

Claimants RSA and Term Sheet:4

Parties to the Tort 

Claimants RSA 

(i) the Debtors; (ii) the TCC; (iii) the Consenting Fire Claimant 

Professionals representing holders of approximately 70% in number of Fire 

Victim Claims; and (iv) the Shareholder Proponents. 

Treatment of Fire 

Victim Claims under 

the Amended Plan 

(Term Sheet) 

Fire Victim Claims Channeled to a Fire Victim Trust 

In accordance with the requirements of section 3292 of AB 1054, on the 

Effective Date or as soon as reasonably practicable thereafter the 

Reorganized Debtors shall establish and fund a Fire Victim Trust with the 

Aggregate Fire Victim Consideration described below. 

All claims (other than the Subrogation Wildfire Claims and Public Entities 

Wildfire Claims) arising from the 2017 and 2018 Northern California 

wildfires, the 2015 Butte Fire, and the Ghost Ship Fire will be permanently 

channeled to the Fire Victim Trust, to be satisfied solely from the Fire 

Victim Trust’s assets, without further recourse to the Debtors and 

Reorganized Debtors (except as discussed below with respect to the 

obligations under the Tax Benefits Payment Agreement). Each holder of a 

4

 This summary is qualified in its entirety by reference to the provisions of the Tort Claimants RSA and 

the Term Sheet. To the extent that any discrepancies exist between the summary described in this 

Motion and the terms of the Tort Claimants RSA or the Term Sheet, the Tort Claimants RSA and the 

Term Sheet shall govern. 

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Fire Victim Claim shall receive payment as determined in accordance with 

the Fire Victim Claims Resolution Procedures. 

The administration of the Fire Victim Trust and settlement and payment of 

the Fire Victim Claims will be determined by the holders of such Claims, 

without any involvement of the Debtors. 

The Class of Fire Victim Claims is impaired and entitled to vote on the 

Amended Plan. 

Fire Victim Trust Funding 

The Fire Victim Trust shall be funded with an aggregate of $13.5 billion in 

value of cash and stock of reorganized PG&E Corp., and will be assigned 

certain rights and causes of action (described below). 

 Cash: $5.4 billion in cash on the Amended Plan Effective Date, plus 

another $1.35 billion in cash payable pursuant to a Tax Benefits 

Payment Agreement (described below). 

 Stock: $6.75 billion in Common Stock of reorganized PG&E Corp. 

(valued at 14.9x Normalized Estimated Net Income), which shall 

represent not less than 20.9% share ownership of the reorganized 

PG&E Corp., assuming the Utility’s current allowed return on 

equity. 

 Assigned Rights and Causes of Action: (i) the Debtors’ rights, 

claims, causes of action, and defenses related to the Fires that they 

may have against vendors, suppliers, third party contractors and 

consultants (including those who provided services regarding the 

Debtors’ electrical system, system equipment, inspection and 

maintenance of the system, and vegetation management), former 

directors and officers of the Debtors (solely to the extent of any 

directors and officers Side B insurance coverage), and others as 

mutually agreed upon by the Debtors and the Shareholder 

Proponents; and (ii) the Debtors’ rights under its 2015 and 2016 

insurance policies to resolve any claims related to the Fires in those 

policy years.

Summary of Tax Benefits Payment Agreement and $1.35 billion Cash 

Payment to be Made Post-Effective Date 

The post-Effective Date cash consideration payable reflects the tax savings 

of the Reorganized Utility as a result of net operating losses and any 

deductions arising from the payment of Fire Victim Claims and 

Subrogation Wildfire Claims. This cash consideration is payable as 

follows: 

 $1.35 billion in cash payable in two installments: (i) $650 million 

paid on January 15, 2021 (for 2020 fiscal year Tax Benefits) and 

(ii) $700 million paid on or before January 15, 2022 (for 2021 fiscal 

year Tax Benefits). 

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 In the event the Tax Benefits for 2020 exceed $650 million, the 

excess shall be used as a prepayment of a portion of the $700 million 

due January 15, 2022.

 In the event the Tax Benefits for 2020 are less than $650 million, or 

for 2021 less than $700 million, (i) the shortfall shall be payable on 

January 15, 2022, and (ii) the Debtors shall deliver to the Fire 

Victim Trust an unconditional, standby letter of credit covering the 

shortfall for the 2020 Tax Benefits, payable at sight, naming the Fire 

Victim Trust as the beneficiary, within 15 days after January 15, 

2021 (the “LOC Issuance Date”), which may be presented to the 

issuing bank for payment on February 9, 2022 to the extent any 

amounts remain owing on that date. If the Reorganized Utility fails 

to deliver the letter of credit within 10 days after the LOC Issuance 

Date, the Fire Victim Trust shall have the right to file a stipulated 

judgment against the Reorganized Utility for the amount of the 

shortfall. 

 In the event that payments received on or before January 15, 2022 

are less than $1.35 billion for any reason, then on February 9, 2022 

the Fire Victim Trust shall have the right to file a stipulated 

judgment against the Reorganized Utility in the amount of the 

shortfall. 

 In the event of a post-emergence change in control (within the 

meaning of Section 382 of the Internal Revenue Code), all 

payments shall become automatically due and payable within 15 

days thereof (and the letter of credit, if issued, may be drawn).

 In the event any post-emergence financing uses or is otherwise 

secured by the Tax Benefits, the Reorganized Utility shall use the 

first $1.35 billion in proceeds from the financing to pay the full 

amount due under the Tax Benefits Payment Agreement to the Fire 

Victim Trust on January 15, 2021.

Agreement to Support 

the Amended Plan 

(RSA Provisions) 

Each party to the Tort Claimants RSA (a “Party”) shall use commercially 

reasonable efforts to support and cooperate with the Debtors to obtain 

confirmation of the Amended Plan and any regulatory or other approvals 

necessary for confirmation or effectiveness of the Amended Plan, and each 

Party shall not support, propose, file, or vote for any plan other than the 

Amended Plan nor otherwise take any action that would interfere with, 

delay, impede, or postpone the solicitation of acceptances, consummation, 

or implementation of the Amended Plan. 

Debtors 

Upon execution of the Tort Claimants RSA, the Debtors shall: (i) deliver a 

draft of the Amended Plan to the Governor of the State of California (the 

“Governor”) on or prior to December 6, 2019 at 7 p.m. (PT);5(ii) provide 

5

 The Debtors delivered the draft Amended Plan on December 6 prior to the 7 p.m. (PT) deadline. 

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the Governor and his counsel and advisors on a timely basis with all 

information necessary to evaluate whether in his judgment the Amended 

Plan and the restructuring transactions provided therein comply with AB 

1054; (iii) file the Amended Plan with the Bankruptcy Court by December 

12, 2019; and (iv) use commercially reasonable efforts to obtain 

confirmation of the Amended Plan as soon as reasonably practicable in 

accordance with the Bankruptcy Code and the Bankruptcy Rules and on 

terms consistent with the Tort Claimants RSA. 

TCC 

Upon entry of an order approving the Tort Claimants RSA, the TCC shall 

file a notice of withdrawal as a proponent of the Alternative Plan and the 

Parties shall immediately suspend all pending discovery regarding the 

Subrogation Claimants RSA Motion [Docket No. 3992] and the Financing 

Motion [Docket No. 4446]. 

Consenting Fire Claimant Professionals 

Each Consenting Fire Claimant Professional shall use all reasonable efforts 

to advise and recommend to its existing and future clients’ (who hold Fire 

Victim Claims) to (i) support and vote to accept the Amended Plan, and (ii) 

to opt-in to consensual releases under Section 10.9(b) of the Amended Plan. 

As provided in Section 3(b)(iv) of the Tort Claimants RSA, if on or before 

the hearing on this Motion, Section 4.19(f)(ii) of the Amended Plan (and 

any related provisions) has not been modified to the satisfaction of the TCC 

and the Requisite Consenting Fire Claimant Professionals, the TCC or the 

Requisite Consenting Fire Claimant Professionals may terminate the Tort 

Claimants RSA as provided therein. 

The Requisite Consenting Fire Claimant Professionals shall provide to 

counsel, who are not Consenting Fire Claimant Professionals, written 

information to facilitate the holders of Fire Victim Claims not represented 

by a Consenting Fire Claimant Professional and their counsel making a 

meaningful and informed participation and voting decision on the 

Amended Plan, and each holder of a Fire Victim Claim shall have the right 

to make his or her own decision regarding voting on the Amended Plan 

after receiving the advice of his or her individual counsel. 

Shareholder Proponents 

Each Shareholder Proponent shall, subject to the receipt of the Disclosure 

Statement and other solicitation materials in respect of the Amended Plan, 

vote or cause to be voted all of its Interests to accept the Amended Plan. 

Stay and Resolution of 

Tubbs Trials 

The Debtors shall promptly enter into discussions (which the Debtors have 

done) for the settlement of all the preference cases arising out of the Tubbs 

fire pending in the Superior Court for the State of California (the “Tubbs 

Cases”), and upon the filing of this Motion, the Parties agree to seek a 15 

day continuance of the Tubbs Cases pursuant to California Code of Civil 

Procedure § 36.5(f), which shall be made no later than December 10, 2019.

Upon approval of the Tort Claimants RSA, the Debtors are required to have 

entered into one or more settlement agreements settling all of the Tubbs 

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Cases, which shall (i) allow such claims subject to payment solely from the 

Fire Victims Trust (as defined in the Term Sheet and provided in the 

Amended Plan), (ii) be in form and substance satisfactory to the parties 

thereto, (iii) be confidential and sealed, (iv) not be admissible or introduced 

into evidence for any purpose in any proceeding, and (v) have filed a 

motion seeking approval of such settlements on shortened notice. 

Stay and Resolution of 

Estimation 

Proceedings 

Upon filing this Motion, the Parties agree to seek a stay of the estimation 

proceedings until an order has been entered resolving the estimation 

proceedings or the Tort Claimants RSA is terminated pursuant to Section 3 

of the Tort Claimants RSA. 

The Debtors shall file a motion seeking entry of an order resolving the 

estimation proceedings within three (3) days of the entry of an order by the 

Bankruptcy Court approving the Disclosure Statement with respect to the 

Amended Plan, to be heard at or before the beginning of the Confirmation 

Hearing. The order approving such motion shall also provide for the 

aggregate estimation and aggregate allocation of the Fire Victim Claims in 

the amount of the Aggregate Fire Victims Consideration for all purposes in 

the Chapter 11 Cases. 

Key Termination 

Rights 

Automatic Termination Events 

The Tort Claimants RSA will terminate automatically upon the occurrence 

of certain events, including: 

 The failure to satisfy certain milestones, requiring that: 

 An order granting this Motion is entered by December 20, 2019.

 The Disclosure Statement for the Amended Plan is approved by 

March 30, 2020. 

 The motion to approve the settlement of the estimation 

proceedings is filed by March 30, 2020. 

 The Amended Plan is confirmed by June 30, 2020. 

 The Amended Plan’s Effective Date occurs prior to August 29, 

2020. 

 The requisite number of votes of individual fire claimants to accept 

the Amended Plan is not obtained by the later of (i) the voting 

deadline for the Amended Plan and (ii) June 30, 2020. 

 The Governor advises the Debtors on or before December 13, 2019 

that the Amended Plan and the restructuring transactions provided 

therein do not in his sole judgment comply with AB 1054 and the 

Debtors have not modified the Amended Plan in a manner 

acceptable to the Governor by the earlier of a hearing of this Motion 

and December 17, 2019. The Parties have agreed not to challenge 

in the Bankruptcy Court the Governor’s exercise of his judgment as 

to these matters. 

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TCC / Requisite Consenting Fire Claimant Professionals Termination 

Events 

The Tort Claimants RSA may be terminated if on or before the hearing on 

this Motion Section 4.19(f)(ii) of the Amended Plan (and any related 

provisions) has not been modified to the satisfaction of the TCC and 

Requisite Consenting Fire Claimant Professionals. 

If the TCC exercises its termination right pursuant to its fiduciary duty (as 

described below), such termination shall only terminate the TCC as a party 

to the Tort Claimants RSA and shall not terminate the Tort Claimants RSA 

for any other Party. 

Debtor / Shareholder Proponent Termination Event 

The Debtors or either Shareholder Proponent may terminate the Tort 

Claimants RSA upon breach by the TCC or Consenting Fire Claimant 

Professionals that represent, in aggregate, more than 8,000 holders of Fire 

Victim Claims. 

Other Termination Events 

In addition to the preceding termination rights, the parties have customary 

termination rights they can exercise in the event of a breach of the Tort 

Claimants RSA by another party. 

Effect of Termination Upon termination of the Tort Claimants RSA: 

 The Parties are released from their prospective obligations, and all 

prior agreements between the Parties are null and void. 

 Estimation proceedings shall recommence in District Court. 

 Obligations relating to settlement of the Tubbs Cases remain 

enforceable, to the extent that the Tort Claimants RSA is approved.

 Tubbs fire liability and damages will be resolved through estimation 

in District Court instead of state court. 

Fiduciary Duty 

Solely as to the TCC, nothing in the Tort Claimants RSA or Amended Plan 

shall require the TCC to take any action that it determines in good faith to 

be inconsistent with its fiduciary duties, but the TCC acknowledges that its 

entry into the Tort Claimants RSA is consistent with its fiduciary duties. 

BASIS FOR RELIEF REQUESTED 

1. The Tort Claimants RSA and Term Sheet Represent a Substantial Achievement 

and Milestone in the Chapter 11 Cases, Are a Sound Exercise of the Debtors’ 

Business Judgment, and Should be Approved Pursuant to Sections 363(b) and 

105(a) of the Bankruptcy Code.

The Tort Claimants RSA and Term Sheet encompass a comprehensive settlement 

resulting from extensive, good faith negotiations and mediation among the Debtors and the other Parties. 

The Tort Claimants RSA not only reflects a substantial compromise of the asserted Fire Victim Claims, 

but also expedites the successful resolution of these Chapter 11 Cases by dispensing with the pending 

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estimation proceedings and the costs, expenses, and uncertainty associated therewith, and paving the 

way toward confirmation of the Amended Plan well in keeping with the June 30, 2020 deadline 

established under AB 1054. The importance of this achievement cannot be overstated. Indeed, as stated 

above, the Amended Plan has the support of all impaired classes and plainly represents the best path for 

the Debtors’ successful emergence from chapter 11 and the expeditious payment of Fire Victim Claims. 

The Court may authorize the Debtors to enter into, and perform under, the Tort Claimants 

RSA pursuant to sections 363(b) and 105(a) of the Bankruptcy Code. Section 363(b) provides, in 

pertinent part, that “[t]he [debtor], after notice and a hearing, may use, sell, or lease, other than in the 

ordinary course of business, property of the estate.” 11 U.S.C. § 363(b)(1). Section 105(a) further 

provides that the “court may issue any order, process, or judgment that is necessary or appropriate to 

carry out the provisions of this title.” 11 U.S.C. § 105(a). Together, these sections of the Bankruptcy 

Code provide the Court with ample authority and discretion to grant the requested relief herein. See In 

re Lionel Corp., 722 F.2d 1063, 1071 (2d Cir. 1983); In re Walter, 83 B.R. 14, 17 (B.A.P. 9th Cir. 1988) 

(“The bankruptcy court has considerable discretion in deciding whether to approve or disapprove the 

use of estate property by a debtor in possession, in the light of sound business justification.”); In re 

ASARCO, L.L.C., 650 F.3d 593, 601 (5th Cir. 2011) (“The business judgment standard in section 363 is 

flexible and encourages discretion.”); In re Montgomery Ward Holding Corp., 242 B.R. 147, 153 (D. 

Del. 1999) (use of assets outside the ordinary course of business permitted if “sound business purpose 

justifies such actions”); Comm. of Asbestos-Related Litigants v. Johns-Manville Corp. (In re JohnsManville Corp.), 60 B.R. 612, 616 (Bankr. S.D.N.Y. 1986) (“Where the debtor articulates a reasonable 

basis for its business decisions (as distinct from a decision made arbitrarily or capriciously), courts will 

generally not entertain objections to the debtor’s conduct.”). 

Once a debtor articulates a valid business justification under section 363 of the 

Bankruptcy Code, a presumption arises that the debtor’s decision was made on an informed basis, in 

good faith, and in the honest belief, the action was in the best interest of the company. In re Integrated 

Resources, Inc., 147 B.R. 650, 656 (Bankr. S.D.N.Y. 1992) (quoting Smith v. Van Gorkom, 488 A.2d 

858, 872 (Del. 1985)). See also, In re AWTR Liquidation Inc., 548 B.R. 300, 314 (Bankr. C.D. Cal. 

2016) (referencing the Cal. Prac. Guide: Corps. (The Rutter Group 2015) Ch. 6–C); In re Johns-Manville 

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Corp., 60 B.R. at 615–16 (“[T]he Code favors the continued operation of a business by a debtor and a 

presumption of reasonableness attaches to a debtor’s management decisions”). Thus, if, as they clearly 

do here, a debtor’s actions satisfy the business judgment rule, then the transaction in question should be 

approved under section 363(b)(1) of the Bankruptcy Code.

Courts have relied on both sections 363(b) and 105(a) when approving plan support 

agreements such as the Tort Claimants RSA, routinely finding that such relief is entirely consistent with 

the applicable provisions of the Bankruptcy Code. See, e.g., In re Pacific Gas and Electric Company, 

Case No. 01-30923 (DM) (Bankr. N.D. Cal. Mar. 27, 2002) [Docket No. 5558] (order approving 

proposed settlement of approximately $2 billion in asserted unsecured claims against the debtor as part 

of plan support agreement under sections 363(b) and 105(a) of the Bankruptcy Code); In re TK Holdings 

Inc., Case No. 17-11375 (BLS) (Bankr. D. Del. Dec. 13, 2017) [Docket No. 1359] (order approving 

postpetition plan support agreement pursuant to sections 363(b) and 105(a) of the Bankruptcy Code); 

see also In re Exide Techs, Case No. 13-11482 (KJC) (Bankr. D. Del. Feb. 4, 2015) [Docket No. 3087] 

(order authorizing debtor to enter into plan support agreement pursuant to sections 363(b) and 105(a) of 

the Bankruptcy Code); In re Tronox Inc., Case No. 09-10156 (ALG) (Bankr. S.D.N.Y. Dec. 23, 2009) 

[Docket No. 1030] (same). 

The Tort Claimants RSA and Term Sheet are the product of substantial arm’s-length, 

good faith negotiations and formal mediation under the auspices of former Bankruptcy Judge Randall 

Newsome, that were successful in building a consensus with the Debtors’ largest creditor constituency 

and resolving unliquidated and contested liabilities that are critical to the chapter 11 plan process and 

the successful administration of these cases. Pursuant to the Tort Claimants RSA, the TCC and 

Consenting Fire Claimant Professionals who represent approximately 70% in number of holders of Fire 

Victim Claims have agreed to support the Amended Plan and to recommend that their respective 

constituencies vote to accept the Amended Plan. This represents an overwhelming amount of consensus 

and support in favor of the Amended Plan, with now all three wildfire claim constituencies (the Public 

Entities, the Subrogation Claimants, and the TCC) committing to support the Amended Plan. 

As this Court is well aware, the TCC and its constituency have asserted that they have 

claims against the Debtors well in excess of $36 billion. Pursuant to the Tort Claimants RSA, those 

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claims will be fully resolved and discharged under the Amended Plan for consideration having a value 

of approximately $13.5 billion. This represents a significant resolution given the magnitude of the 

asserted claims, the pending estimation proceedings, and the substantial costs, risks, and uncertainties 

attendant thereto. 

After assessing the asserted Fire Victim Claims, the Debtors concluded that entry into 

the Tort Claimants RSA is in the best interests of the Debtors and their estates. The Debtors, with the 

assistance and advice of their retained professionals, have fully evaluated the Fire Victim Claims and 

the assertions of the TCC and of the firms representing the individual claimants regarding the value of 

such claims, as well as the risks of ongoing litigation. As stated, the Fire Victim Claims represent an 

uncertain but potentially large exposure that the TCC has alleged could exceed $36 billion. The Debtors 

have weighed this potential exposure against the costs, burdens, and uncertainties of further litigation 

and determined that resolving the Fire Victim Claims as provided in the Tort Claimants RSA is a prudent 

exercise of business judgment on behalf of the Debtors. 

The negotiations culminating in the Tort Claimants RSA and Term Sheet were discussed 

with management and the Debtors’ Board of Directors (the “Board”) during the negotiation process. 

The Board and management have been presented with data, information, and analysis pertaining to the 

Debtors’ estimation of the Debtors’ potential liability with respect to the Fire Victim Claims on multiple 

occasions and thoroughly evaluated, with the assistance of outside counsel and advisors, all aspects of 

the Tort Claimants RSA and Term Sheet. The result of those deliberations was the decision to enter into 

the Tort Claimants RSA. 

If the Tort Claimants RSA is not approved, the Fire Victim Claims would be subject to 

the pending estimation proceedings before the District Court and this Court, and a jury trial in the 

California State Superior Court. As the Court is aware, estimation of the Fire Victim Claims will be a 

time consuming, expensive, and highly uncertain process involving complicated issues of state and 

federal law and fact-specific issues relating to causation, liability, and damages involving not less than 

twenty-two separate wildfires and literally thousands of individual loss claims. The Tort Claimants 

RSA avoids the risks and uncertainties of the estimation proceedings to the Debtors and their other 

economic stakeholders with respect to a major claims constituency, providing greater certainty to the 

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plan process and the Debtors’ ability to timely emerge from chapter 11. Moreover, as stated, approval 

of the Tort Claimants RSA will result in the support of the Amended Plan by all impaired classes, paving 

the way to the successful conclusion of these Chapter 11 Cases. 

In view of the magnitude of the asserted Fire Victim Claims, the risks, uncertainties and 

expense attendant to litigation of such claims and other factors noted above, the Debtors believe entry 

into the Tort Claimants RSA is fair and reasonable and represents a sound exercise of the Debtors’ 

business judgment. 

2. Entry into the Tort Claimants RSA is in the Best Interests of the Debtors’ Estates 

and Should be Approved Pursuant to Bankruptcy Rule 9019. 

The Debtors further submit that entry into the Tort Claimants RSA is in the best interests 

of the Debtors’ estates and all stakeholders and should be approved under Bankruptcy Rule 9019, in the 

event such rule is applicable. Notably, as indicated, distributions will be made to the Fire Victim Trust 

only upon confirmation and consummation of the Amended Plan. 

Bankruptcy Rule 9019(a) provides “[o]n motion by the trustee and after notice and a 

hearing, the court may approve a compromise and settlement.” Fed. R. Bankr. R. 9019(a). This rule 

empowers Bankruptcy Courts to approve settlements “if they are in the best interests of the estate.” In 

re Drexel Burnham Lambert Group, Inc., 134 B.R. 499, 505 (Bankr. S.D.N.Y. 1991); see also Myers v. 

Martin (In re Martin), 91 F.3d 389, 394 (3d Cir. 1996). Compromises and settlements are normal and 

welcomed occurrences in chapter 11 because they allow a debtor and its creditors to avoid the financial 

and other burdens associated with litigation over contentious issues and expedite the administration of 

the bankruptcy estate. See Prot. Comm. for Indep. Stockholders of TMT Trailer Ferry, Inc. v. Anderson, 

390 U.S. 414, 424 (1968); Martin v. Kane (In re A&C Properties), 784 F.2d 1377, 1380-81 (9th Cir. 

1986). The decision to approve a particular compromise lies within the sound discretion of the Court. 

See Nellis v. Shugrue, 165 B.R. 115, 123 (S.D.N.Y. 1994); Woodson v. Fireman’s Fund Ins. Co. (In re 

Woodson), 839 F. 2d 610, 620 (9th Cir. 1988). A proposed compromise and settlement should be 

approved when it is “fair and equitable” and “in the best interest of the [debtor’s] estate.” In re A&C 

Properties, 784 F.2d at 1381. The court must apprise itself “of all facts necessary for an intelligent and 

objective opinion of the probabilities of ultimate success should the claim be litigated.” Prot. Comm. 

for Indep. Stockholders of TMT Trailer Ferry, Inc., 390 U.S. at 424. 

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Courts in this jurisdiction typically consider the following factors in determining whether 

a settlement should be approved: (i) the probability of success in litigation, with due consideration for 

the uncertainty in fact and law; (ii) the difficulties, if any, to be encountered in the matter of collecting 

any litigated judgment; (iii) the complexity and likely duration of the litigation and any attendant 

expense, inconvenience, and delay; and (iv) the paramount interest of the creditors and the proper 

deference to their reasonable views in the premises. See In re Woodson, 839 F. 2d at 620 (quoting A&C 

Props., 784 F.2d at 1380). It is not necessary that the conclusions reached in the consideration of each 

of the above factors support the settlement, but taken as a whole, the conclusions must favor the approval 

of the settlement. See In re Pacific Gas and Elec. Co., 304 B.R. 395, 417 (Bankr. N. D. Cal. 2004) 

(citing In re WCI Cable, Inc., 282 B.R. 457, 473-74 (Bankr. D. Or. 2002)). 

The standard Courts apply for approval of settlements under Bankruptcy Rule 9019 is 

deferential to the debtor’s judgment and merely requires the Court to ensure that the settlement does not 

fall below the lowest point in the range of reasonableness in terms of benefits to the estate. See City 

Sanitation v. Allied Waste Servs. of Mass., LLC (In re Am. Cartage, Inc.), 656 F.3d 82, 91-92 (1st Cir. 

2011) (“The task of both the bankruptcy court and any reviewing court is to canvass the issues and see 

whether the settlement falls below the lowest point in the range of reasonableness . . . If a trustee chooses 

to accept a less munificent sum for a good reason (say, to avoid potentially costly litigation), his 

judgment is entitled to some deference.”) (citing In re Thompson, 965 F.2d 1136, 1145 (1st Cir. 1992)); 

Shugrue, 165 B.R. at 123 (a court need not be aware of or decide the particulars of each individual claim 

resolved by the settlement or “assess the minutia of each and every claim”; rather, a court “need only 

canvass the issues and see whether the settlement falls ‘below the lowest point in the range of 

reasonableness.’”); see also, In re Pacific Gas and Elec. Co., 304 B.R. at 417; In re Planned Protective 

Servs., Inc., 130 B.R. 94, 99 n.7 (Bankr. C.D. Cal. 1991) (same). 

While a court must “evaluate . . . all . . . factors relevant to a fair and full assessment of 

the wisdom of the proposed compromise,” Anderson, 390 U.S. at 424-25, a court need not conduct a 

“mini-trial” of the merits of the claims being settled, Port O’Call Invest. Co. v. Blair (In re Blair), 538 

F.2d 849, 851-52 (9th Cir. 1976), or conduct a full independent investigation. Drexel Burnham Lambert 

Group, 134 B.R. at 505. As one court explained in assessing a global settlement of claims, “[t]he 

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appropriate inquiry is whether the Settlement Agreement in its entirety is appropriate for the . . . estate.” 

Air Line Pilots Ass’n, Int’l v. Am. Nat’l Bank & Trust Co. (In re Ionosphere Clubs, Inc.), 156 B.R. 414, 

430 (S.D.N.Y. 1993), aff’d 17 F.3d 600 (2d Cir. 1993) (emphasis added). 

Many courts have approved support agreements similar to the Tort Claimants RSA under 

Bankruptcy Rule 9019. See, e.g., In re Pacific Gas and Electric Company, Case No. 01-30923 (DM) 

(Bankr. N.D. Cal. Mar. 27, 2002) [Docket No. 5558] (approving a settlement, as part of plan support 

agreement with senior debtholders, pursuant to Bankruptcy Rule 9019); Energy Future Holdings Corp. 

v. Del. Trust Co., 648 F. App’x 277, 285 (3d Cir. 2016) (affirming approval under Bankruptcy Rule 

9019 of holistic settlement of secured creditors’ claims); In re Residential Capital, LLC, 2013 Bankr. 

LEXIS 2601 (Bankr. S.D.N.Y. Jun. 27, 2013) (order approving plan support agreement under section 

363 of the Bankruptcy Code and Bankruptcy Rule 9019); In re CHC Grp. Ltd., Case No. 16-31854 

(BJH) (Bankr. N.D. Tex. Dec. 20, 2016) [Docket No. 1381] (order approving plan support agreement 

under Bankruptcy Rule 9019); In re Federal-Mogul Global Inc., T&N Limited, Case No. 01-10578 

(JFK) (Bankr. D. Del. Feb. 7, 2007) [Docket No. 11508] (same); In re Fiddler’s Creek, LLC, Case No. 

10-3846 (CPM) (Bankr. M.D. Fla. Feb. 25, 2011) [Docket No. 702] (order approving plan support 

agreement and related settlement under Bankruptcy Rule 9019); In re Nautilus Holdings Ltd., Case No. 

14-22885 (RDD) (Bankr. S.D.N.Y. Oct. 3, 2014) [Docket No. 165] (approving a restructuring support 

agreement pursuant to section 363 of the Bankruptcy Code and Bankruptcy Rule 9019); Motorola, Inc. 

v. Official Comm. of Unsecured Creditors (In re Iridium Operating LLC), 478 F.3d 452, 467 (2d Cir. 

2007) (approving settlement of lien challenge and claims of secured creditors pursuant to Bankruptcy 

Rule 9019 as it “cleared the way for implementation of a reorganization plan.”). 

As demonstrated above, the terms of the Tort Claimants RSA and Term Sheet are fair 

and reasonable and in the best interest of the Debtors, their estates, creditors and other stakeholders, and 

should be approved. The Tort Claimants RSA and Term Sheet are the result of protracted, good faith, 

arms’ length negotiations among sophisticated principals and competent and experienced retained 

professionals who effectively and efficiently represented the interests of their respective clients. 

Further, as stated, the Tort Claimants RSA eliminates the costs, litigation, and risks 

associated with the estimation of the Fire Victim Claims currently pending before three separate Courts. 

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These proceedings involve complex and uncertain areas of state and federal law as well as highly fact 

specific issues involving twenty-two separate fires and thousands of underlying individual claims. 

Indeed, with respect to the Tubbs fire, the most severe 2017 fire, although the Debtors believe, as 

confirmed by Cal FIRE, that their equipment was not involved, there can be no certainty that a jury in 

California Superior Court would not reach a different conclusion. As to the Fire Victim Claims, the 

Tort Claimants RSA and Term Sheet completely mitigate this risk. Courts have routinely acknowledged 

that uncertainty of litigation and federal policy weigh in favor of approval of settlements. See In re 

Laser Realty, Inc. v. Fernandez (In re Fernandez), 2009 Bankr. LEXIS 2846, at *9-10 (Bankr. D.P.R. 

Mar. 31, 2009) (“The Court concludes that the uncertainty of the litigation between the debtors and 

Citibank weighs heavily in favor of the approval of the Settlement Agreement.”); In re Manuel 

Mediavilla, Inc., 568 B.R. 551, 567 (B.A.P. 1st Cir. 2017) (recognizing “federal policy encouraging 

settlement of bankruptcy litigation.”). 

Additionally, the settlement, as embodied in the Tort Claimants RSA, under any scenario 

clearly does not fall below the lowest point in the range of reasonableness. The TCC has asserted that 

the prepetition fire liabilities associated with the Fire Victim Claims exceed $36 billion. The Aggregate 

Fire Victim Consideration having a value of $13.5 billion is a reasonable compromise between the 

Debtors’ current estimate of accrued liabilities on account of uninsured and underinsured fire claims of 

$8.4 billion and the TCC’s asserted $36 billion of such claims. Entry into the Tort Claimants RSA 

avoids the risks of an adverse litigated outcome that could be severely detrimental to the recoveries of 

the other creditor constituencies, and it serves to expedite the administration of these cases and 

distributions to holders of allowed claims. 

3. The Plan Support Terms of the Tort Claimants RSA are Reasonable and 

Customary. 

The provisions in the Tort Claimants RSA that require the Parties to support the Amended 

Plan are standard and routine and are not inconsistent with this Court’s decision to terminate exclusivity. 

They are consistent with this Court’s order instituting mediation and largely achieve a global consensus 

that will be reflected in the Amended Plan. Absent these routine and customary plan support provisions, 

the Debtors’, the TCC’s, and the other Parties’ substantial efforts and hard-fought negotiations would 

be meaningless. Courts have stated as much when presented with challenges to approval of plan support 

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agreements and voting lock-up provisions. See, e.g., In re Indianapolis Downs, LLC., 486 B.R. 286, 296 

(Bankr. D. Del. 2013) (refusing to designate votes over an RSA provision that “predictably” contained 

a commitment to vote for the plan embodied in the deal, when “the record clearly reflects that the 

Restructuring Support Parties were acting at all times to maximize their own recoveries and to advance 

the Debtors’ reorganization process to facilitate a prompt and substantial return on their respective 

claims”); see also Trans World Airlines, Inc. v. Texaco Inc. (In re Texaco Inc.), 81 B.R. 813, 815 (Bankr. 

S.D.N.Y. 1988) (“If Pennzoil were free to support another plan while Texaco’s plan was still capable of 

being approved, the negotiation between Texaco and Pennzoil would be meaningless.”). Restructuring 

support agreements have been utilized and found to be entirely appropriate in similar circumstances 

where other Courts have made the decision to terminate a debtor’s exclusive periods. See, e.g., In re 

Exide Technologies, Case No. 13-11482 (KJC) (Bankr. D. Del. Feb. 2, 2015) [Docket Nos. 2893, 3087] 

(approving, after exclusivity had been terminated, a plan support agreement where certain supporting 

creditors agreed not to support or vote for any other plan); In re SeraCare Life Sciences, Case No. 06-

00510 LA11 (Bankr. S.D. Cal. Dec. 21, 2006) [Docket Nos. 837, 961] (approving, after exclusivity had 

been terminated, a plan support agreement pursuant to which the signing parties agreed not to support 

any other plan). 

4. Conclusion 

The Tort Claimants RSA represents a major milestone and achievement in these Chapter 

11 Cases. It is supported by the TCC and law firms representing approximately 70% in number of the 

in excess of 70,000 Fire Victim Claims that have been filed to date in these cases. Approval of the Tort 

Claimants RSA, which is fully warranted by the applicable undisputed facts and applicable law, will 

expedite the successful conclusion of these cases and, just as importantly, distributions to the victims of 

the prepetition wildfires. 

NOTICE

Notice of this Motion will be provided to (i) the Office of the United States Trustee for 

Region 17 (Attn: Andrew Vara, Esq. and Timothy Laffredi, Esq.); (ii) counsel to the Creditors 

Committee; (iii) counsel to the TCC; (iv) the Securities and Exchange Commission; (v) the Internal 

Revenue Service; (vi) the Office of the California Attorney General; (vii) the California Public Utilities 

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Commission; (viii) the Nuclear Regulatory Commission; (ix) the Federal Energy 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; (xii) the Consenting 

Fire Claimant Professionals; (xiii) counsel for the Shareholder Proponents; and (xiiv) those persons who 

have formally appeared in these Chapter 11 Cases and requested service pursuant to Bankruptcy Rule 

2002. The Debtors respectfully submit that no further notice is required. 

No previous request for the relief sought herein has been made by the Debtors to this or 

any other court. 

WHEREFORE the Debtors respectfully request entry of an order granting (i) the relief 

requested herein as a sound exercise of the Debtors’ business judgment, appropriate under section 363(b) 

and 105(a) of the Bankruptcy Code and Bankruptcy Rule 9019, and in the best interests of their estates, 

creditors, shareholders, and all other parties in interest, and (ii) the Debtors such other and further relief 

as the Court may deem just and appropriate. 

Dated: December 9, 2019 

WEIL, GOTSHAL & MANGES LLP 

CRAVATH, SWAINE & MOORE LLP 

KELLER & BENVENUTTI LLP 

By: _/s/ Jessica Liou______________

 Jessica Liou 

Attorneys for Debtors and Debtors in Possession 

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