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UNITED STATES BANKRUPTCY COURT

NORTHERN DISTRICT OF CALIFORNIA

In re: 

PG&E CORPORATION,

 - and -

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 4, 2019

Time: 10:00 AM

Place: Courtroom 17

 450 Golden Gate Ave.

 16th Floor

 San Francisco, CA

TENTATIVE CONSIDERATIONS ON OBJECTIONS TO AMENDED AND RESTATED 

RESTRUCTURING SUPPORT AGREEMENT 

On December 4, 2019, the court will conduct a continued 

hearing on the proposed Amended and Restated Restructuring 

Support Agreement (“RSA”). At that hearing the court will 

consider further oral argument in support of or opposition to 

the RSA. The Debtors, the Ad Hoc Group of Subrogation Claim 

Holders (“Subro Group”), and others supporting the RSA will have 

Signed and Filed: November 26, 2019

________________________________________

DENNIS MONTALI

U.S. Bankruptcy Judge

Entered on Docket 

November 26, 2019

EDWARD J. EMMONS, CLERK 

U.S. BANKRUPTCY COURT 

NORTHERN DISTRICT OF CALIFORNIA

Case: 19-30088 Doc# 4872 Filed: 11/26/19 Entered: 11/26/19 17:16:25 Page 1 of

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one hour to be divided as their counsel agree, including time 

for rebuttal. The Official Committee of Tort Claimants (“TCC”), 

the Official Committee of Unsecured Creditors and others 

opposing the RSA will also have one hour for oral argument, to 

be divided as their counsel agree. 

In anticipation of that hearing the court has identified

significant issues that should be addressed by the parties. The 

court has relied on the Subro Group’s Statement of the Ad Hoc 

Group of Subrogation Claim Holders (Dkt. No. 4644), and in 

particular the Objection Response Chart filed concurrently 

therewith (Dkt. No. 4644-1). 

The court sets forth its present views about several of 

those objections using the same categories and same definitions.

I. Issues Addressed by Amended and Restated RSA

#1 and #2 - Appear to be resolved satisfactorily.

#3 - The Subro Group and the Debtors appear duty bound to 

negotiate “together” with other creditor constituencies 

or in mediation. The court does not believe that is a 

constructive approach and believes that portion of the 

RSA should be disapproved.

#4 - This portion of the RSA addresses a situation that 

may exist “provided...the Bankruptcy Court determines 

Debtors are insolvent....” As a practical matter the court 

may not be able to make such a determination without the 

initiation of a contested matter, opposition thereto, 

etc. The court believes the more appropriate outcome 

would be that the Debtors, if they concede that they are 

insolvent, would terminate the RSA. Following any such 

Case: 19-30088 Doc# 4872 Filed: 11/26/19 Entered: 11/26/19 17:16:25 Page 2 of

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determination, there would be no precondition that any 

such revised plan would not – or would – subordinate the 

Subro Group claims to the IP Claims.

#5 and #6 - Appear to be satisfactory resolutions of the 

pending objections.

#7 - Comments regarding Bankruptcy Court determination of 

insolvency are much the same as indicated above in #4. 

#8 - A five business day notice procedure for an 

amendment to the RSA appears to be too short.

#9 - The parties should address what would happen if a 

submitter of a ballot did not indicate either an opt-in 

or an opt-out to the release provisions. Is “opt-out” the 

default?

In that same objection, the explanation appearing at 

page 7 of 19 appears satisfactory. 

II. Objections Unaddressed by Clarifying Changes to the 

Amended RSA and Revised Plan

I. Why Approval of the Amended RSA Should Not Be 

Delayed due to Cash Considerations or Other 

Proceedings

#1 - The court is of the view that the question of 

whether the $11 billion payment to the Subro Group would 

force the IP parties to take non-cash consideration is a 

plan issue that need not be dealt with in consideration 

of the RSA. 

#2 - The court does not share the view that approval of 

the RSA will undermine the mediation process.

#3 and #4 - The court is satisfied with the explanation 

provided by the Subro Group.

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II. Why the Amended RSA Does Not Violate the Rights of 

Individual Insured Parties

#5 - The court will not address the question of whether 

the TCC is estopped as the Subro Group’s explanation is 

argumentative. It is correct, however, that the RSA is 

predicated upon confirmation of a plan that must comply 

with AB 1054. Further, the made-whole doctrine should be 

considered on a claim-by-claim basis and perhaps needs to 

be resolved independently of the RSA determination 

through AP 19-3053. 

#6 and #7 - The court agrees with the Subro Group that 

insurers can pursue and settle claims independently of 

those of their insureds. Further, 11 U.S.C. § 509 does 

not appear to be implicated although applicable state law 

does. 

#8 - The court rejects the contention that the RSA 

violates the Subro Group’s obligations and duties of good 

faith under California law or California insurance 

regulations.

III. Why the Amended RSA Releases are Permissible

#9 - The court agrees with the Subro Group. It makes no 

comment regarding TCC proposed plan’s inclusion of third 

party releases. It also agrees with the Subro Group that 

the Settlement Payment Condition is not coercive and 

essentially does leave the parties the same choice absent 

approval of the RSA. Hard choices are still choices, not 

coercion.

//

Case: 19-30088 Doc# 4872 Filed: 11/26/19 Entered: 11/26/19 17:16:25 Page 4 of

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IV. Why Specific Amended RSA and Form of Release 

Provisions are Permissible

#10 - See comment above (I, #4) regarding the consequence 

of Debtors being determined to be insolvent.

#11 - The court agrees that the Subro Group can make a 

strategic decision about voting for or against the plan. 

Either way, AB 1054 says what it says if Debtors are 

unable to emerge by its deadline. The consequences of a 

$20 billion claim asserted by the Subro Group need not be 

addressed at this point.

#12 - The court agrees with the Subro Group that the RSA 

can include common features found in other restructuring 

support agreements.

#13 and #14 - The RSA releases appear to be symmetrical 

and reciprocal and need not be disapproved. 

#15 - The notion of including consents by fire victims as 

part of a confirmation order implicates the adequacy of 

any disclosure statement. The court prefers a simple 

statement included in any ballot submitted to and 

returned by the fire victims.

#16 – The court has no comment. 

V. The Applicable Standard of Review is Deferential to 

the Debtors’ Business Judgment

#17 - While A & C Properties is generally the authority 

to test the reasonability of a settlement under Fed. R. 

Bankr. P. 9019, the court is inclined to agree with the 

TCC that scrutiny under the “fair and equitable” test 

appears appropriate in this case.

//

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VI. Remaining Objections Should be Overruled

#18 and #19 - The exigencies of this complex case are 

such that the court is not worried that approval of the 

RSA constitutes an impermissible sub rosa plan, nor does 

it constitute impermissible solicitation under 11 U.S.C. 

§ 1125.

**END OF TENTATIVE CONSIDERATIONS**

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