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UNITED STATES BANKRUPTCY COURT

for the Northern District of California

UNITED STATES BANKRUPTCY COURT

NORTHERN DISTRICT OF CALIFORNIA

In re: 

PG&E CORPORATION,

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PACIFIC GAS AND ELECTRIC COMPANY,

Debtors.

☐ Affects PG&E Corporation 

☐ Affects Pacific Gas and Electric Company 

☒ Affects both Debtors

* All papers shall be filed in the Lead Case, No. 

19-30088 (DM).

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Bankruptcy Case

No. 19-30088-DM

Chapter 11

Jointly Administered

MEMORANDUM DECISION REGARDING 

MOTIONS TO TERMINATE EXCLUSIVITY

I. INTRODUCTION

Before this court are two motion to terminate Debtors’ exclusivity periods for filing a 

Chapter 11 Plan and Disclosure Statement. The Ad Hoc Committee of Senior Unsecured 

Noteholders filed their motion on June 25, 2019 (dkt. #2741). The Ad Hoc Group of 

Signed and Filed: August 16, 2019

________________________________________

DENNIS MONTALI

U.S. Bankruptcy Judge

Entered on Docket 

August 16, 2019

EDWARD J. EMMONS, CLERK 

U.S. BANKRUPTCY COURT 

NORTHERN DISTRICT OF CALIFORNIA

Case: 19-30088 Doc# 3568 Filed: 08/16/19 Entered: 08/16/19 14:23:49 Page 1 of

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UNITED STATES BANKRUPTCY COURT

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Subrogation Claim Holders filed their motion on July 23, 2019 (dkt. #3147) (together the 

“Motions”). The Motions came on for hearing on August 13, 2019 and then were submitted. 

For the reasons that follow, the Motions will be DENIED.

This court has jurisdiction over these contested matters pursuant to 28 U.S.C. §§ 157(b) 

and 1334(b). These are core proceedings under 28 U.S.C. § 157(b)(2)(A) and (O). Venue is 

appropriate in this court. 28 U.S.C. § 1409(a).

Pursuant to 11 U.S.C. § 1121, a debtor has an exclusive right to file a plan within the 

first 120 days of a bankruptcy case.1 The Bankruptcy Court may modify this time period for 

cause. 11 U.S.C. § 1121(d)(1). “Cause” is not defined in the Bankruptcy Code, and is a factspecific inquiry largely within the discretion of the bankruptcy court. See In re Henry Mayo 

Newhall Mem'l Hosp., 282 B.R. 444, 452 (B.A.P. 9th Cir. 2002); In re Dow Corning Corp., 208 

B.R. 661, 664-65 (Bankr. E.D. Mich. 1997) (using a nine factor test to consider whether cause 

had been established). 

The court granted Debtors' first motions to extend exclusivity on May 22, 2019 (dkt. 

#2226). The Motions now seek to terminate the first extension periods before they end on 

September 26, 2019 if no plan is filed by Debtors.

II. DISCUSSION

When the Motions were filed, perhaps even before that when the court first considered 

extending exclusivity, it seemed likely that it would be terminated for a variety of reasons, not 

the least of which is that this court did exactly that in the previous Pacific Gas and Electric 

Company bankruptcy and has done it on other occasions with other debtors. Further, comments 

from many parties as well as the California Public Utilities Commission and the Governor’s

office were that competition is best facilitated with the termination of exclusivity.

More important to the court, the parties, the fire victims, and all other concerned citizens 

of Northern California, is to find a clear path to reach the goal of compensation for the fire 

victims who are involuntary creditors of these debtors as well as for the contractual claims of 

their voluntary creditors.

 1 Unless specified otherwise, all chapter, code and rule references are to the Bankruptcy Code, 

11 U.S.C. §§ 101-1532, and the Federal Rules of Bankruptcy Procedure, Rules 1001-9037. 

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UNITED STATES BANKRUPTCY COURT

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Even during the arguments on the Motions on August 13, 2019, nothing changed and it 

seemed likely that the court would open the door at least to the proponents of the two Motions. 

That is so notwithstanding the August 12th filings by Debtors of their Debtors’ Supplemental 

Statement, etc. that outlines their exit strategy (Dkt. No. 3512).

On further reflection, not only because of the exigencies of these cases but because of 

the statutory presumption in favor of debtors’ exclusivity (at least for a time), coupled with the 

prospective timetable now laid out in Debtors’ Supplement Statement, persuades the court that 

the best choice is to leave the Debtors’ exclusivity in place for them to proceed with their

proposed resolution.

The two competing plans reflected in the Motions and the outline of theirs by the 

Debtors all involve what looms on the horizon as a complicated process to estimate the 

enormous amount of money that must be dedicated to the compensation of the fire victims and 

their insurers as a matter of fairness, compliance with the Bankruptcy Code’s order of priorities, 

and the mandate of recent California legislation, AB 1054.

Competing plans are tempting, and no doubt produce a feast for lawyers, accountants, 

investment bankers and others, not to mention the intellectual challenges to the court. But the 

inescapable fact is that the fire victims and their insurers should not need to wait for conclusion 

of expensive, lengthy and uncertain disputes that only indirectly concern them. Bankruptcy 

issues such as the absolute priority rule, cramdown of equity, super priorities and impairment. 

are all exciting challenges for bankruptcy practitioners but they have little or nothing to do with

compensating victims of enormous and unimaginable tragedies. If there were no victims to 

attend to, then perhaps the battles that would be fought would be the bankruptcy equivalent of a 

proxy fight or a hostile takeover. That outcome, however, is of no benefit to the victims and is 

antithetical to the court’s and other parties’ repeated stated goal of compensating the victims.

At the start of the hearing on August 14th, the court restated that number one priority and 

goal. Proponents of the two competing plans and those in favor of opening the door to even 

more competition reminded the court of its “credible and confirmable” standard for 

consideration of termination of exclusivity. The Ad Hoc Committee of Senior Unsecured 

Noteholders and the Ad Hoc Group of Subrogation Claim Holders have both met those 

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UNITED STATES BANKRUPTCY COURT

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standards. The court has no doubt that their hard bargaining would result in refinement if not 

resolution of some of the contests described above That the outcome might have produced 

competing accepted and confirmed plans, resulting in U.S.C. § 1129(c)’s rarely invoked court 

consideration of the preferences of creditors and equity security holders in determining which 

plan to confirm. 

At the present time there is no purpose in engaging in such an exercise. The Debtors 

have placed before all a proposal that, if coaxed and guided to maturity should result in a proper 

outcome for all creditors without needing to deal with all of these other issues.

For all the foregoing reasons, and with thanks to the Ad Hoc Committee of Senior 

Unsecured Noteholders and to the Ad Hoc Group of Subrogation Claim Holders for their 

enormous efforts and contributions, the court has decided to exercise its discretion and leave

those efforts unfulfilled while the Debtors proceed with theirs. That is the best of the choices 

presented.

The court is concurrently issuing separate orders denying each of the Motions for the 

reasons stated in this memorandum decision.

*** END OF MEMORANDUM DECISION***

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UNITED STATES BANKRUPTCY COURT

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COURT SERVICE LIST

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