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28 Weil, Gotshal & Manges LLP 767 Fifth Avenue New York, NY 10153-0119

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 TO SETTLE 

THE CLAIMS OF TUBBS PREFERENCE 

CLAIMANTS AND (II) GRANTING RELATED 

RELIEF 

(THE “TUBBS SETTLEMENT MOTION”) 

Date: January 21, 2020 

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

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

 San Francisco, CA 94102 

Objection Deadline: January 15, 2020, 4:00 p.m. (PT)

Debtors.

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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 to enter into settlement 

agreements, copies of which will be filed under seal, settling and liquidating the claims asserted 

against the Debtors by the 18 elderly or infirm individual plaintiffs for whom the Court granted 

relief from the stay to pursue their claims relating to the Tubbs fire (including the 32 indispensable 

parties associated with such individuals’ claims, the “Tubbs Preference Claimants”), and (ii) 

granting related relief. 

In support of the Motion, the Debtors submit the Declaration of Janet Loduca 

(the “Loduca Declaration”), filed contemporaneously herewith. A proposed form of order 

granting the relief requested herein is annexed hereto as Exhibit A (the “Proposed Order”). 

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TABLE OF CONTENTS 

Page 

I. PRELIMINARY STATEMENT .............................................................................................7

II. JURISDICTION ......................................................................................................................8

III. BACKGROUND .....................................................................................................................8

IV. THE TORT CLAIMANTS RSA .............................................................................................9

V. THE TUBBS SETTLEMENTS .............................................................................................10

VI. BASIS FOR RELIEF REQUESTED ....................................................................................11

A. Entry into the Tubbs Settlements is in the Best Interests of the Debtors’ Estates and 

Should be Approved under Bankruptcy Rule 9019. ..................................................11

1. The Probability of Success in Litigation ........................................................13

2. The Difficulties to be Encountered in Collecting Any Litigated Judgment ...14

3. The Complexity and Expense of Any Litigation .............................................14

4. The Interests of Creditors ..............................................................................15

B. Entry into the Tubbs Settlements is 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

VII. NOTICE .................................................................................................................................17

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TABLE OF AUTHORITIES 

Page 

Cases 

In re ASARCO, L.L.C., 

650 F.3d 593 (5th Cir. 2011) .......................................................................................................16 

In re AWTR Liquidation Inc., 

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

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

656 F.3d 82 (1st Cir. 2011) ..........................................................................................................12 

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

60 B.R. 612 (Bankr. S.D.N.Y. 1986) .....................................................................................16, 17 

In re Cresta Tech. Corp., 

No. 16-50808 MEH, 2018 WL 2422415 (Bankr. N.D. Cal. May 29, 2018) ...............................15 

In re Drexel Burnham Lambert Grp., Inc., 

134 B.R. 499 (Bankr. S.D.N.Y. 1991) ...................................................................................11, 13 

In re Equa-Chlor LLC, 

No. 08-40599, 2008 WL 1927066 (Bankr. W.D. Wash. Apr. 29, 2008) .....................................14 

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), 

Nos. 04–10585 (GAC), 04–12634 (GAC), 07–00067 (GAC), 2009 WL 2913685 (Bankr. D.P.R. 

Mar. 31, 2009)..............................................................................................................................13 

In re Lionel Corp., 

722 F.2d 1063 (2d Cir. 1983).......................................................................................................16 

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

784 F.2d 1377 (9th Cir. 1986) ...............................................................................................11, 12 

In re Montgomery Ward Holding Corp., 

242 B.R. 147 (D. Del. 1999) ........................................................................................................16 

Myers v. Martin (In re Martin), 

91 F.3d 389 (3d Cir. 1996).....................................................................................................11, 14 

Nellis v. Shugrue, 

165 B.R. 115 (S.D.N.Y. 1994) ...............................................................................................12, 14 

In re Pacific Gas and Elec. Co., 

304 B.R. 395 (Bankr. N. D. Cal. 2004) .................................................................................12, 13 

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In re Planned Prot. Servs., Inc., 

130 B.R. 94 (Bankr. C.D. Cal. 1991) ...........................................................................................12 

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

538 F.2d 849 (9th Cir. 1976) .......................................................................................................13 

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

390 U.S. 414 (1968) ...............................................................................................................11, 13 

In re SK Foods, L.P., 

No. 09-29162-D-11, 2011 WL 10715382 (Bankr. E.D. Cal. Jan 27, 2011) ................................13 

Smith v. Van Gorkom, 

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

In re Thompson, 

965 F.2d 1136 (1st Cir. 1992) ......................................................................................................12 

In re W.T. Grant Co., 

699 F.2d 599 (2d Cir.)..................................................................................................................12 

In re Walter, 

83 B.R. 14 (B.A.P. 9th Cir. 1988)................................................................................................16 

In re WCI Cable, Inc., 

282 B.R. 457 (Bankr. D. Or. 2002) ................................................................................................2 

Statutes 

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

11 U.S.C. § 363(b) .....................................................................................................................16, 17 

11 U.S.C. § 1107(a) ...........................................................................................................................9 

11 U.S.C. § 1108 ................................................................................................................................9 

28 U.S.C. § 157 ..................................................................................................................................8 

28 U.S.C. § 1334 ................................................................................................................................8 

28 U.S.C. § 1408 ................................................................................................................................8 

28 U.S.C. § 1409 ................................................................................................................................8 

California Code of Civil Procedure § 36.5(f)...................................................................................10 

Other Authorities 

B.L.R. 5011-1(a) ................................................................................................................................8 

Fed. R. Bankr. P. 1015(b) ..................................................................................................................9 

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Fed. R. Bankr. P. 2002 .......................................................................................................................7 

Fed. R. Bankr. P. 9018 .....................................................................................................................11 

Fed. R. Bankr. P. 9019 ............................................................................................................. passim

Order Referring Bankruptcy Cases and Proceedings to Bankruptcy Judges, General Order 24 ......8 

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MEMORANDUM OF POINTS AND AUTHORITIES 

I. PRELIMINARY STATEMENT1

 After a lengthy hearing and considered deliberation, this Court, by Order dated December 19, 

2019 [Docket No. 5174], approved that certain Restructuring Support Agreement, dated as of 

December 6, 2019 (as amended on December 16, 2019, the “Tort Claimants RSA”), among the 

Debtors, the TCC, the Consenting Fire Claimant Professionals, and the Shareholder Proponents 

(each as defined in the Tort Claimants RSA). The Tort Claimants RSA reflects a comprehensive 

settlement by and among the Debtors, the TCC, representatives of individuals holding over 70% in 

number of Fire Victim Claims, and certain shareholders of the treatment of Fire Victim Claims 

under the Debtors’ Amended Plan. The entry into and approval of the Tort Claimants RSA 

represents a monumental step toward the Debtors achieving a fair, equitable, and timely resolution 

of the billions of dollars in liabilities arising from the 2017 and 2018 Northern California fires 

(including the Tubbs fire) and the 2015 Butte fire, and a successful resolution of the Debtors’ 

Chapter 11 Cases by June 30, 2020. 

 An integral part of the heavily negotiated Tort Claimants RSA and the global settlement 

embodied therein and, indeed, a precondition to its execution, was that the parties agree to resolve, 

pursuant to the Amended Plan, the pending wildfire claims estimation proceedings before the 

District Court for the Northern District of California and, relatedly, the state court cases of the Tubbs 

Preference Claimants (the “Tubbs Cases”). Absent the Tort Claimants RSA and a satisfactory 

resolution of the Tubbs Cases as required therein, a jury trial in the Tubbs Cases was set to begin 

imminently, with jury selection scheduled for January 7, 2020. 

As the Debtors have noted to the Court in connection with their motion to approve the Tort 

Claimants RSA, not only does the Tort Claimants RSA encompass a comprehensive resolution of 

the Fire Victim Claims, it eliminates the risks, costs, and uncertainties attendant to the Tubbs Cases. 

And, although the Debtors believe, based upon CAL FIRE’s investigation of the Tubbs fire and 

1

 Capitalized terms used but not herein defined shall have the meanings ascribed to them in the 

Debtors’ and Shareholder Proponents’ Joint Chapter 11 Plan of Reorganization dated December 

12, 2019 [Docket No. 5101] (the “Amended Plan”). 

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other matters, that they are not responsible for the Tubbs fire, the Tubbs Preference Claimants have 

other theories. Accordingly, there could be no assurance of a favorable outcome if the Tubbs Cases 

were to proceed, particularly in the context of a jury trial. 

With these considerations in mind, and as provided in the Tort Claimants RSA, the Debtors 

have engaged in good faith, arm’s-length negotiations with the attorneys for the Tubbs Preference 

Claimants and have reached settlements (the “Tubbs Settlements”) of all of the claims asserted in 

the Tubbs Cases for an aggregate liquidated and allowed claim in the Aggregate Claim Amount (as 

defined in the Loduca Declaration). Consistent with the Tort Claimants RSA, the Tubbs Settlements 

do not require the Debtors make any payments to the Tubbs Preference Claimants now; rather, the 

settled claims will be channeled like all other Fire Victim Claims to the Fire Victim Trust pursuant 

to and upon the Effective Date of the Amended Plan, and will be paid, satisfied, and resolved solely 

by the Fire Victim Trust from the Aggregate Fire Victim Consideration, in accordance with the 

terms and procedures of the Fire Victim Trust to be established pursuant to the Amended Plan. 

Obtaining Court approval of the Tubbs Settlements is an integral component of the Tort 

Claimants RSA and to the successful administration of these cases. Moreover, the Tubbs 

Settlements themselves represent an appropriate exercise of the Debtors’ business judgment and 

satisfy all of the requirements of Bankruptcy Rule 9019. Accordingly, the Tubbs Settlements should 

be approved. 

II. JURISDICTION 

This 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. 

III. BACKGROUND 

On January 29, 2019, 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 

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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). 

On February 12, 2019, the United States Trustee (the “U.S. Trustee”) appointed an Official 

Committee of Unsecured Creditors (the “Creditors Committee”). On February 15, 2019, the U.S. 

Trustee appointed the TCC (together with the Creditors Committee, the “Committees”). 

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”). 

On August 21, 2019, this Court entered an order granting the TCC’s motion seeking to lift 

the automatic stay to allow certain pending litigation filed prepetition by individuals who hold 

claims arising out of the Tubbs fire and are elderly or infirm, or otherwise deserving of special 

accommodation, to proceed to trial in Superior Court for the State of California. Since then, the 

Debtors and the Tubbs Preference Claimants have engaged in extensive discovery and preparation 

for trial, which was set to begin January 7, 2020, but has been stayed pursuant to the Tort Claimants 

RSA. 

IV. THE TORT CLAIMANTS RSA 

On December 9, 2019, the Debtors filed a motion seeking approval of the Tort Claimants 

RSA. On December 17, 2019, the Court held a hearing to consider the Debtors’ motion to approve 

the Tort Claimants RSA and granted the motion. The Court issued a formal order authorizing the 

Debtors to enter into the Tort Claimants RSA and approving the terms of the Tort Claimants RSA 

on December 19, 2019 [Docket No. 5174]. 

Among other things, the Tort Claimants RSA requires the Debtors to “promptly enter into 

discussions for the settlement of all the preference cases arising out of the Tubbs fire pending in the 

Superior Court for the State of California” with the Tubbs Preference Claimants. Tort Claimants 

RSA § 2(a). The Tort Claimants RSA also provides that upon the filing of the Tort Claimants RSA 

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Motion, the parties to the Tort Claimants RSA would seek a 15-day continuance of the Tubbs Cases 

pursuant to California Code of Civil Procedure § 36.5(f). Id. at § 2(d). The Tort Claimants RSA 

additionally provides that the Debtors shall (i) enter “into one or more settlement agreements settling 

all of the Tubbs Cases . . . which shall (A) allow such claims subject to payment solely from the 

Fire Victim[] Trust . . . (C) be confidential and sealed, and (D) not be admissible or introduced into 

evidence for any purpose in any proceeding, including without limitation the Estimation Matters or 

in any other case or proceeding in or related to the Chapter 11 Cases,” and (ii) file a motion with 

the Bankruptcy Court on shortened notice seeking approval of the Tubbs Settlements. Id. at § 2(h). 

Upon their entry into the Tort Claimants RSA, the Debtors promptly entered into settlement 

discussions with the Tubbs Preference Claimants and sought a stay of the Tubbs Cases. On 

December 17, 2019, the State Court granted a 15-day continuance of the Tubbs Cases, which runs 

through January 22, 2020. The settlement discussions culminated in the Debtors and each of the 

Tubbs Preference Claimants entering into settlement agreements to resolve the Tubbs Cases and the 

claims asserted against the Debtors. On December 26, 2019, in light of the Tort Claimants RSA 

and the Tubbs Settlements, the State Court entered a further order vacating the existing Tubbs trial 

dates and setting a hearing to show cause regarding dismissal of the Tubbs Cases for March 2, 2020. 

V. THE TUBBS SETTLEMENTS 

The Tubbs Settlements settle and liquidate the claims asserted against the Debtors by the 

Tubbs Preference Claimants by allowing each of the claims at the agreed-upon settlement amount 

reflected in the relevant agreement, for the Aggregate Claim Amount (and each individual 

claimant’s allowed claim as reflected in the relevant settlement agreement, the “Settled Claim 

Amount”). Each of the settled claims is to be channeled to, paid, and resolved solely by the Fire 

Victim Trust, in accordance with the terms and procedures of the Fire Victim Trust to be established 

pursuant to the Amended Plan. The Tubbs Settlements do not increase the consideration to be 

funded by the Debtors to the Fire Victim Trust under the Amended Plan. Pursuant to the Amended 

Plan, the Tubbs Preference Claimants will have no recourse against the Debtors or the reorganized 

Debtors, or their respective assets and properties. In exchange for their respective Settled Claim 

Amount, each of the Tubbs Preference Claimants release the Debtors and all other persons or entities 

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who may have caused or contributed to the damages alleged in the Complaints from any claims that 

arise out of those made in the Tubbs Cases. The Tubbs Preference Claimants also agree to sign the 

Made Whole Waiver appended to the Amended Plan. 

In addition, as stated, pursuant to the terms of the Tort Claimants RSA and the Tubbs 

Settlements, the parties have agreed to keep the terms of the Tubbs Settlements strictly confidential, 

providing access to certain limited parties as discussed more fully in the Debtors’ Motion Pursuant 

to 11 U.S.C. §§ 105(a) and 107(b) and Fed. R. Bankr. P. 9018 for Entry of an Order Authorizing 

the Redaction and Sealing of Confidential Information from Tubbs Settlement Documents, filed 

contemporaneously herewith. 

Upon the effective date of the Tubbs Settlements, counsel for the Tubbs Preference 

Claimants will execute a request for dismissal with prejudice of the Tubbs Cases and deliver the 

executed request to the Debtors, which the Debtors will file with the State Court. 

VI. BASIS FOR RELIEF REQUESTED 

A. Entry into the Tubbs Settlements is in the Best Interests of the Debtors’ Estates 

and Should be Approved under Bankruptcy Rule 9019. 

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. P. 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 Grp., 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. In re A&C 

Properties, 784 F.2d at 1380-81. A proposed compromise and settlement should be approved when 

it is “fair and equitable” and “in the best interest of the [debtor’s] estate.” Id. at 1381. 

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The standard 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)); Nellis v. Shugrue, 165 B.R. 115, 123 (S.D.N.Y. 1994) (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’”) (quoting In re W.T. Grant Co., 699 

F.2d 599, 608 (2d Cir.)); see also In re Pacific Gas and Elec. Co., 304 B.R. 395, 417 (Bankr. N.D. 

Cal. 2004); In re Planned Prot. Servs., Inc., 130 B.R. 94, 99 n.7 (Bankr. C.D. Cal. 1991) (same). 

Courts in this jurisdiction typically consider four factors in determining whether a settlement 

should be approved: (1) the probability of success in litigation, with due consideration for the 

uncertainty in fact and law; (2) the difficulties, if any, to be encountered in the matter of collecting 

any litigated judgment; (3) the complexity and likely duration of the litigation and any attendant 

expense, inconvenience, and delay; and (4) the paramount interest of the creditors and the proper 

deference to their reasonable views. In re A&C Properties, 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. at 417 (citing In re WCI Cable, Inc., 282 B.R. 457, 473-74 (Bankr. D. 

Or. 2002)). 

The Tubbs Settlements represent a reasonable compromise among the Debtors and the 

Tubbs Preference Claimants, and obviate the expense, delay, inconvenience, and uncertainty that 

would attend further litigation of those claims in State Court. Moreover, the Tubbs Settlements are 

an integral element of the Tort Claimants RSA and the comprehensive settlement of the Fire Victim 

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Claims embodied in the Tort Claimants RSA. See In re SK Foods, L.P., No. 09-29162-D-11, 2011 

WL 10715382, at *5 (Bankr. E.D. Cal. Jan 27, 2011) (approving a settlement under Bankruptcy 

Rule 9019 because “the compromise is far preferable to estimation, at least in this case, because it 

will avoid the need for, if not a trial, at least a certain amount of discovery and an evidentiary hearing 

that would likely be required for the court to be in a position to estimate the claims”). Analyzing 

the Tubbs Settlements in light of the Ninth Circuit’s four factors for approving a settlement under 

Bankruptcy Rule 9019 only confirms that the Court should approve the Tubbs Settlements. 

1. The Probability of Success in Litigation 

The Tubbs Settlements fully and finally resolve the disputes between the Tubbs Preference 

Claimants and the Debtors without the need for a trial before a jury. A jury trial in Superior Court 

presents significant risk and uncertainty, which favors approval of the Tubbs Settlements. See In re 

Laser Realty, Inc. v. Fernandez (In re Fernandez), Nos. 04–10585 (GAC), 04–12634 (GAC), 07–

00067 (GAC), 2009 WL 2913685, at *3 (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.”). 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, In re Drexel Burnham Lambert Group, 134 B.R. at 505. See also In re Pacific Gas 

and Elec. Co., 304 B.R. at 417. 

As the Debtors have stated, and as CAL FIRE concluded, the Debtors’ equipment was not 

involved in the Tubbs fire. However, there can be no certainty a jury in California Superior Court 

would reach the same conclusion. Although the Debtors believe the CAL FIRE conclusion has 

significant evidentiary value, it is not binding on the Tubbs Preference Claimants. Further, the 

Tubbs Preference Claimants have expressed a high degree of confidence that a jury would find 

compelling their theory that CAL FIRE overlooked evidence and, therefore, reached the wrong 

conclusion regarding PG&E’s role in the Tubbs fire. The Debtors also anticipate that the Tubbs 

Preference Claimants would vigorously fight to exclude entirely or severely limit the admissibility 

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of the CAL FIRE conclusion. The outcome of any such dispute presents yet another uncertainty. 

Thus, in addition to the risk that a jury would find in the Tubbs Preference Claimants’ favor even 

after hearing evidence of CAL FIRE’s conclusion, there exists the additional risk that the Debtors 

would not even be permitted to present the favorable CAL FIRE evidence to the jury if the Tubbs 

trial were to proceed. 

The special circumstances of the Tubbs Preference Claimants that allowed their trials to be 

heard on an expedited basis, and the nature of the claims asserted, also magnify the risks associated 

with a jury trial and serve as further justification for the Tubbs Settlements. 

Furthermore, the size of the Tubbs fire amplifies the risk an adverse ruling would have on 

the Debtors’ ability to achieve a global resolution of these cases and proceed expeditiously to 

confirmation of the Amended Plan by June 30, 2020. The Tort Claimants RSA and the Tubbs 

Settlements that are a fundamental part thereof completely obviate this risk and uncertainty and 

militate in favor of prompt approval of the Tubbs Settlements. 

2. The Difficulties to be Encountered in Collecting Any Litigated Judgment 

The difficulties of collection inherent to the litigation at issue are not a relevant consideration 

here, as the Debtors are seeking to settle claims asserted against them, not claims for recovery they 

may have against another party. See In re Equa-Chlor LLC, No. 08-40599, 2008 WL 1927066, at 

*6 (Bankr. W.D. Wash. Apr. 29, 2008) (“The Court places little weight on this factor. The proposed 

settlement involves a claim that the Debtor is defending against rather than seeking any affirmative 

relief. Collectability is therefore irrelevant.”). 

3. The Complexity and Expense of Any Litigation 

The Tubbs Settlements also minimize any further cost in time, resources, and money 

associated with fully litigating the claims of the Tubbs Preference Claimants. The complexity and 

costs associated with litigation can erode stakeholder recoveries—separate and apart from the risk 

generally inherent in the pursuit of uncertain litigation and its impact on the expeditious 

administration of these cases. See Nellis, 165 B.R. at 124. Compromises are favored precisely to 

“minimize litigation and expedite the administration of a bankruptcy estate.” In re Martin, 91 F.3d 

at 393. 

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This rule applies with particular force here. The Tubbs Cases involve 18 different damages 

claims and 50 individual claimants. Fact and expert discovery has not yet been completed and the 

parties anticipated an 8-week trial. Resources that otherwise would have been consumed by the 

trial can now be devoted to ensuring an orderly and expedient path to confirmation of the Amended 

Plan and the Debtors’ successful emergence from chapter 11 well prior to June 30, 2020. 

4. The Interests of Creditors 

The last criterion considered by Courts reviewing a proposed settlement is the interest of the 

creditors, with deference to their reasonable views. Here, the Tubbs Preference Claimants, who are 

represented by skilled professionals who negotiated the settlements at arm’s-length, obviously favor 

the approval of the Tubbs Settlements. 

Furthermore, the TCC as a fiduciary for all Fire Claimants, and the representatives of 

individuals holding over 70% in number of Fire Victim Claims also support approval of the Tubbs 

Settlements. 

The compromises reached in the Tubbs Settlements will benefit the holders of Fire Victim 

Claims and, indeed, all other parties in interest in these cases, by ensuring the Tort Claimants RSA 

remains in effect. See In re Cresta Tech. Corp., No. 16-50808 MEH, 2018 WL 2422415, at *5 

(Bankr. N.D. Cal. May 29, 2018) (“This interest [of the creditors] reflects the desire of creditors to 

obtain the maximum possible recovery but also their competing desire that recovery occur in the 

least amount of time.”) (quotation marks omitted). 

Beyond promoting the expeditious resolution of these chapter 11 cases, the Tubbs 

Settlements also benefit other creditors, because they, too, benefit from avoiding the risks and 

uncertainties of the trial of the Tubbs Cases. The Tubbs Settlements not only eliminate these risks 

and uncertainties, but also assure the continued vitality of the Tort Claimants RSA and the 

comprehensive settlement embodied therein. 

The Debtors have carefully considered the risks, complexity, and expense associated with 

litigating the claims of the Tubbs Preference Claimants, and the potential delays that would be 

occasioned by such litigation. In the Debtors’ sound business judgment, these factors anchor the 

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Tubbs Settlements as fair, reasonable, and equitable, and in the best interests of their estates. For 

these reasons, the Tubbs Settlements should be approved. 

B. Entry into the Tubbs Settlements is a Sound Exercise of the Debtors’ Business 

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

the Bankruptcy Code. 

As stated, the Tubbs Settlements eliminate significant risk and uncertainty, and are a key 

element of the recently approved settlement incorporated in the Tort Claimants RSA. Furthermore, 

the Aggregate Claim Amount represents an eminently fair compromise between the Debtors and 

the Tubbs Preference Claimants, reached through good faith, arm’s-length negotiations. The Court 

may authorize the Debtors to enter into the Tubbs Settlements pursuant to sections 363(b) and 

105(a) of the Bankruptcy Code because entry into the Tubbs Settlements clearly falls within the 

Debtors’ sound business judgment. 

 Section 363(b) of the Bankruptcy Code 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) of the Bankruptcy Code 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 relief requested 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 Johns-Manville 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.”). 

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 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 that 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 JohnsManville 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, a debtor’s actions satisfy the business judgment rule, as they do here for the reasons described 

above, then the transaction in question should be approved under section 363(b)(1) of the 

Bankruptcy Code. 

VII. 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 

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) counsel to 

the Tubbs Preference Claimants; and (xiii) 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 

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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: January 6, 2020 

WEIL, GOTSHAL & MANGES LLP 

KELLER & BENVENUTTI LLP 

By: _/s/ Jessica Liou___________

 Jessica Liou 

Attorneys for Debtors and Debtors in 

Possession 

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