1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

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 

UNITED STATES BANKRUPTCY COURT 

NORTHERN DISTRICT OF CALIFORNIA 

SAN FRANCISCO DIVISION 

In re: 

PG&E CORPORATION,

- and -

PACIFIC GAS AND ELECTRIC 

COMPANY,

Bankruptcy Case No. 19-30088 (DM)

Chapter 11 

(Lead Case) (Jointly Administered) 

MOTION OF DEBTORS PURSUANT TO 

11 U.S.C. §§ 363 AND 105(a) AND FED R. 

BANKR. P. 2002 FOR AUTHORITY TO 

ESTABLISH DE MINIMIS ASSET SALE 

PROCEDURES 

“DE MINIMIS ASSET SALE PROCEDURES 

MOTION” 

Date: Sept. 10, 2019 

Time: 9:30 a.m. (Pacific Time) 

Place: United States Bankruptcy Court 

Courtroom 17, 16th Floor 

San Francisco, CA 94102 

Objection Deadline: Sept. 3, 2019 

 4:00 p.m. (Pacific Time) 

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).

Case: 19-30088 Doc# 3575 Filed: 08/16/19 Entered: 08/16/19 17:05:59 Page 1 of

 18
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

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

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 and 105(a) of title 11 of the United States Code (the “Bankruptcy Code”) and Rule 2002 

of the Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”), for entry of an order 

authorizing and establishing expedited procedures (the “De Minimis Asset Sale Procedures”) to (a) sell 

or transfer in the ordinary course of the Debtors’ business and without further order of the Court certain 

assets, including any rights or interests therein, that are no longer of any use to the Debtors’ business 

and are of relatively de minimis value compared to the Debtors’ total asset base (the “De Minimis 

Assets”; and the sales of such De Minimis Assets, the “De Minimis Asset Sales”) and (b) pay all 

necessary fees and expenses incurred by the Debtors in connection with the De Minimis Asset Sales. In 

support of the Motion, the Debtors submit the declaration of John Boken, filed contemporaneously 

herewith. 

A proposed form of order granting the relief requested herein is annexed hereto as Exhibit A

(the “Proposed Order”). 

Case: 19-30088 Doc# 3575 Filed: 08/16/19 Entered: 08/16/19 17:05:59 Page 2 of

 18
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

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

TABLE OF CONTENTS 

I. Jurisdiction .................................................................................................................................... 6

II. Background ................................................................................................................................... 6

III. The De Minimis Asset Sale Procedures........................................................................................ 6

IV. Basis for Relief Requested .......................................................................................................... 11

a. The Court Should Approve the Proposed De Minimis Asset Sale Procedures

Pursuant to Sections 363 and 105(a) of the Bankruptcy Code as a Sound

Exercise of the Debtors’ Business Judgment .................................................................. 11

b. The De Minimis Asset Sale Procedures Satisfy the Notice and Hearing

Requirements Under Section 363(b)(1) .......................................................................... 14

c. The Proposed De Minimis Asset Sale Procedures Satisfy the Requirements of

Section 363(f) and Allow the Debtors to Sell or Transfer Property Free and

Clear ................................................................................................................................ 15

V. Request for Bankruptcy Rule 6004 Waivers .............................................................................. 17

VI. Notice .......................................................................................................................................... 17

Case: 19-30088 Doc# 3575 Filed: 08/16/19 Entered: 08/16/19 17:05:59 Page 3 of

 18
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

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

TABLE OF AUTHORITIES 

Page(s) 

Cases 

Aalfs v. Wirum (In re Straightline Invs., Inc.), 

525 F.3d 870 (9th Cir. 2008) ............................................................................................................ 13 

In re Borders Grp., Inc., 

453 B.R. 477 (Bankr. S.D.N.Y. 2011) ........................................................................................ 14, 17 

In re Chateaugay Corp., 

973 F.2d 141 (2d Cir. 1992).............................................................................................................. 14 

In re Commercial Mortg. & Fin. Co., 

414 B.R. 389 (Bankr. N.D. Ill. 2009) ............................................................................................... 13 

In re Enron Corp., 

Case No. 01‒16034 (AJG), 2003 WL 21755006 (Bankr. S.D.N.Y. July 28, 2003) ......................... 17 

In re First Prot., Inc., 

440 B.R. 821 (B.A.P. 9th Cir. 2010)................................................................................................. 12 

United States ex rel. Harrison v. Estate of Deutscher, 

115 B.R. 592 (M.D. Tenn. 1990) ...................................................................................................... 14 

In re Integrated Res., Inc., 

147 B.R. 650 (Bankr. S.D.N.Y. 1992) .............................................................................................. 15 

In re Johns-Manville Corp., 

60 B.R. 612 (Bankr. S.D.N.Y. 1986) ................................................................................................ 14 

In re Lionel Corp., 

722 F.2d 1063 (2d Cir. 1983)............................................................................................................ 14 

Marshack v. Orange Commercial Credit (In re Nat’l Lumber & Supply, Inc.), 

184 B.R. 74 (B.A.P. 9th Cir. 1995)................................................................................................... 14 

Martino v. First Nat’l Bank of Harvey (In re Garofalo’s Finer Foods, Inc.), 

186 B.R. 414 (N.D. Ill. 1995) ........................................................................................................... 14 

Med. Malpractice Ins. Assoc. v. Hirsch (In re Lavigne), 

114 F.3d 379 (2d Cir. 1997).............................................................................................................. 13 

Meoli v. Am. Med. Serv. of San Diego, 

287 B.R. 808 (S.D. Cal. 2003) .......................................................................................................... 12 

In re MF Glob. Inc., 

467 B.R. 726 (Bankr. S.D.N.Y. 2012) .............................................................................................. 17 

In re MF Glob. Ltd., 

535 B.R. 596 (Bankr. S.D.N.Y. 2015) .............................................................................................. 15 

Case: 19-30088 Doc# 3575 Filed: 08/16/19 Entered: 08/16/19 17:05:59 Page 4 of

 18
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

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

Morgan Olson L.L.C. v. Frederico (In re Grumman Olson Indus., Inc.), 

467 B.R. 694 (S.D.N.Y. 2012) .................................................................................................... 15, 16 

In re Nellson Nutraceutical, Inc., 

369 B.R. 787 (Bankr. D. Del. 2007) ................................................................................................. 13 

In re PW, LLC, 

391 B.R. 25 (9th Cir. BAP 2008)...................................................................................................... 17 

In re Roth Am., Inc., 

975 F.2d 949 (3d Cir. 1992)........................................................................................................ 12, 13 

Watford v. S. Cent. Farm Credit, ACA (In re Watford), 

159 B.R. 597 (M.D. Ga. 1993) ......................................................................................................... 13 

Statutes 

11 U.S.C. § 102(1) ............................................................................................................................ 15, 16 

11 U.S.C. § 105(a) .................................................................................................................................. 15 

11 U.S.C. § 363 ............................................................................................. 7, 8, 9, 11, 12, 13, 14, 15, 17 

11 U.S.C. § 1102 ..................................................................................................................................... 16 

11 U.S.C. § 1107 ................................................................................................................................. 7, 12 

11 U.S.C. § 1108 ....................................................................................................................................... 7 

28 U.S.C. § 157(b) .................................................................................................................................... 7 

28 U.S.C. § 1334 ....................................................................................................................................... 7 

28 U.S.C. § 1408 ...................................................................................................................................... 7 

28 U.S.C. § 1409 ....................................................................................................................................... 7 

Other Authorities 

Fed. R. Bankr. P. 1015 .............................................................................................................................. 7 

Fed. R. Bankr. P. 2002 ...................................................................................................................... 16, 18 

Fed. R. Bankr. P. 5011-1........................................................................................................................... 7 

Fed. R. Bankr. P. 6004 ............................................................................................................................ 18 

Order Referring Bankruptcy Cases and Proceedings to Bankruptcy Judges, General 

Order 24 .............................................................................................................................................. 7 

Case: 19-30088 Doc# 3575 Filed: 08/16/19 Entered: 08/16/19 17:05:59 Page 5 of

 18
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

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

MEMORANDUM OF POINTS AND AUTHORITIES 

I. 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.), 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. 

II. 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). 

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 an Official Committee of Tort Claimants (the “Tort Claimants Committee” and, 

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 the First Day Motions and Related Relief [Docket 

No. 263] (the “Wells Declaration”). 

III. THE DE MINIMIS ASSET SALE PROCEDURES

The periodic sale of De Minimis Assets is a necessary, ordinary-course element of the Debtors’

business and is beneficial to the Debtors’ estates.1 Prior to the Petition Date, in the ordinary course of 

1

 The sale of Real Property Interests, including de minimis Real Property Interests, is not covered by 

this Motion. The Debtors separately filed a Motion of Debtors Pursuant to 11 U.S.C. §§ 363 and 

105(a) for an Order (i) Authorizing Debtors to (a) Sell, Transfer, Lease or Otherwise Encumber Real 

Property, (b) Enter into Acquisition, Lease, License, and Permit Agreements Relating to Third-Party 

Property, (c) Honor Eminent Domain Settlements, in each Case, Subject to Certain Parameters, and 

Case: 19-30088 Doc# 3575 Filed: 08/16/19 Entered: 08/16/19 17:05:59 Page 6 of

 18
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

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

business, the Debtors regularly entered into transactions to sell De Minimis Assets that were no longer 

needed or that had otherwise become obsolete and were not necessary or useful to continue the Debtors’ 

electricity and natural gas operations. These De Minimis Assets include, without limitation, furniture, 

fixtures, equipment, streetlights, transformers, surplus material from warehouses, scrap metal, vehicles, 

and other various assets. In addition, prior to the commencement of the Chapter 11 Cases, the Debtors 

also entered into transactions, from time to time, to sell certain De Minimis Assets relating to their natural 

gas gathering delivery and electric distribution businesses that were no longer necessary for the operation 

of their business. The Debtors submit that the continuation of these De Minimis Asset Sales during the 

Chapter 11 Cases is a necessary and appropriate component of their operations and is in the best interest 

of the Debtors, their creditors, and all parties in interest. 

Accordingly, by this Motion, the Debtors are seeking authority to establish the De Minimis Asset 

Sale Procedures set forth below to allow them to continue these ordinary course sale transactions, 

consistent with their prepetition practices, to sell or transfer certain De Minimis Assets, including any 

rights or interests therein, with the sale price equal to or less than $15,000,000, as calculated within the 

Debtors’ reasonable discretion, in any individual transaction or series of related transactions, to a single 

buyer or group of related buyers, whether by private sale or by auction, without the need for further 

Court approval and, to the extent applicable and as set forth below, with liens attaching to the proceeds 

of such sale or transfer with the same validity, extent, and priority as had attached to the De Minimis 

Assets immediately prior to such sale or transfer. The Debtors are also seeking authority to pay all 

necessary fees and expenses incurred in connection with the sale or transfer of De Minimis Assets, 

including, but not limited to, commission fees to agents, auctioneers, and brokers. 

As set forth in the Boken Declaration, the Debtors believe that most of the De Minimis Asset 

Sales are part of the ordinary course of the Debtors’ business and, therefore, permitted under 

section 363(c) of the Bankruptcy Code without the need for Court authority. The Debtors also believe, 

however, that potential purchasers may nevertheless request confirmation that the De Minimis Asset 

(ii) Granting Related Relief [Docket No. 1004] (the “Real Property Motion”). The Court approved

the Real Property Motion on April 25, 2019 [Docket No. 1676].

Case: 19-30088 Doc# 3575 Filed: 08/16/19 Entered: 08/16/19 17:05:59 Page 7 of

 18
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

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

Sales are authorized by the Bankruptcy Court. Further, the Debtors anticipate that it is possible that 

some De Minimis Asset Sales may constitute transactions outside the ordinary course of the Debtors’ 

business, thereby requiring this Court’s approval pursuant to section 363(b)(1) of the Bankruptcy Code. 

Obtaining separate Court approval for each De Minimis Asset Sale would be administratively 

burdensome to the Court and costly to the Debtors’ estates and could eliminate or substantially 

undermine the economic benefit that would be realized from such sales by the Debtors’ estates. In some 

instances, the usual process for obtaining Court approval for such sales may hinder the Debtors’ ability 

to take advantage of sale opportunities that are available only for a limited time. Accordingly, to alleviate 

the cost and delay of filing a separate motion for each proposed De Minimis Asset Sale and to eliminate 

any uncertainty regarding the Debtors’ authority to consummate certain sales, the Debtors seek approval 

of the De Minimis Asset Sale Procedures set forth herein. 

To the extent applicable, pursuant to the De Minimis Asset Sale Procedures, the Debtors would 

be permitted to sell De Minimis Assets that are encumbered by liens or encumbrances only if the 

transaction satisfies at least one of the five (5) enumerated requirements of section 363(f) of the 

Bankruptcy Code. Furthermore, the De Minimis Asset Sales would be subject to any applicable 

restrictions under the Debtors’ Debtor-in-Possession Credit Agreement, dated as of February 1, 2019, 

among Pacific Gas and Electric Company as borrower, PG&E Corporation as guarantor, JPMorgan 

Chase Bank, N.A. (the “DIP Agent”), as administrative agent, and the financial institutions from time 

to time party thereto (the “DIP Credit Agreement”), as approved by the Court by final Order dated 

March 27, 2019 [Docket No. 1091] (the “Final DIP Order”). Pursuant to the procedures set forth below, 

if the Debtors sell or transfer any De Minimis Assets that are encumbered by liens, such liens would 

attach only to the proceeds of the sale or transfer with the same validity, extent, and priority as 

immediately prior to the De Minimis Asset Sale. 

Accordingly, the Debtors propose the following De Minimis Asset Sale Procedures: 

1) De Minimis Asset Sales Less than or Equal to $1 million:

a. The Debtors are authorized to sell or transfer any De Minimis Asset for total purchase

price that is less than or equal to $1 million (each sale, a “Non-Noticed De Minimis

Asset Sale”), without further Court approval and without providing notice of the NonNoticed De Minimis Sale to any party, whether by private sale or by auction. The

Case: 19-30088 Doc# 3575 Filed: 08/16/19 Entered: 08/16/19 17:05:59 Page 8 of

 18
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

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

Debtors are further authorized to take any actions that are reasonable and necessary 

to close the Non-Noticed De Minimis Sale and obtain the sale proceeds and pay any 

necessary fees and expenses incurred in connection therewith, including paying all 

reasonable commissions and fees to third-party sale agents, or auctioneers in 

connection with the Non-Noticed De Minimis Sale; and 

b. If any of the De Minimis Assets to be sold or transferred by the Debtors pursuant to

a Non-Noticed De Minimis Asset Sale are encumbered by liens (other than assets

encumbered solely by liens granted in connection with the DIP Credit Agreement),

the Debtors will seek to obtain the consent of the applicable lienholder(s). If the

Debtors are unable to obtain the consent of the applicable lienholder(s), the Debtors

may seek to sell or transfer the encumbered De Minimis Assets as a Noticed De

Minimis Sale (as defined below) in accordance with the procedures below.

2) De Minimis Asset Sales Greater than $1 million but Less than or Equal to $15 million:

a. For any sale or transfer of De Minimis Assets where the total aggregate purchase price

is greater than $1 million but less than or equal to $15 million (a “Noticed De

Minimis Asset Sale”), the Debtors shall file with the Court a notice of such

transaction (the “Transaction Notice”), substantially in the form annexed hereto as

Exhibit B and serve a copy thereof by electronic mail, facsimile, overnight courier,

or hand delivery on the Core Notice Parties (as defined below). As set forth on

Exhibit B, each Transaction Notice will include (i) a description of the De Minimis

Asset proposed to be sold or transferred, (ii) the identity of the purchaser or transferee

and any relationship such party has with the Debtors, (iii) the identities of any

lienholder(s) known to the Debtors as holding liens on or with respect to the De

Minimis Asset, (iv) the material economic terms and conditions of the proposed De

Minimis Asset Sale (which may be provided by attaching the applicable contract or

contracts to the Transaction Notice), (v) any proposed commission, fees, or other

similar expenses to be paid in connection with such transaction, and (vi) instructions

regarding the procedures for asserting an objection to the Noticed De Minimis Asset

Sale;

b. The Debtors shall serve any Transaction Notice on (i) counsel to the DIP Agent, (ii)

counsel to the Creditors Committee, (iii) counsel to the Tort Claimants Committee

(iv) the Office of the U.S. Trustee for Region 17, and (v) any other creditors holding

liens on the De Minimis Assets subject to the proposed transaction (collectively, the

“Core Notice Parties”). The Debtors shall not be required to serve any Transaction

Notice on any other parties and no further or additional notice of the proposed Noticed

De Minimis Asset Sale shall be required;

c. The Core Notice Parties shall have fifteen (15) calendar days after service of a

Transaction Notice to file and serve any objections to a Noticed De Minimis Asset

Sale (the “Notice Period”);

d. If any material economic term of a Noticed De Minimis Asset Sale is amended or

revised after transmittal of the Transaction Notice, but prior to the expiration of the

Notice Period, the Debtors shall serve a revised Transaction Notice on the Core Notice

Parties describing the material economic terms to be amended or revised. If a revised

Case: 19-30088 Doc# 3575 Filed: 08/16/19 Entered: 08/16/19 17:05:59 Page 9 of

 18
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

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

Transaction Notice is required, the Notice Period shall be extended for an additional 

five (5) calendar days;

e. Any objection to a Noticed De Minimis Asset Sale (each, an “Objection”) must:

(i) be in writing; (ii) set forth the name of the objecting party; (iii) provide the basis

for the Objection and the specific grounds therefor; (iv) be filed electronically with

the Court; and (v) be served on (1) the Debtors, (2) Weil, Gotshal & Manges LLP,

767 Fifth Avenue, New York, New York 10153 (Attn: Stephen Karotkin, Esq. and

Jessica Liou, Esq.), as counsel to the Debtors, and (3) Keller & Benvenutti LLP, 650

California Street, Suite 1900, San Francisco, CA 94108 (Attn: Tobias S. Keller, Esq.

and Jane Kim, Esq.), as co-counsel to the Debtors, all in accordance with the

procedures set forth in the Second Amended Order Implementing Certain Notice and

Case Management Procedures [Docket No. 1996] (the “Case Management Order”),

so as to be received on or before 4:00 p.m. (Pacific Time) on the last day of the Notice

Period;

f. If an Objection is properly filed and served: (i) the Objection shall be deemed a

request for a hearing on the Noticed De Minimis Asset Sale and the Objection shall

be heard at the next scheduled omnibus hearing in these Chapter 11 Cases that is at

least ten (10) calendar days after service of the Objection (provided that the Debtors

reserve the right to seek a hearing prior to such time); and (ii) the Noticed De Minimis

Asset Sale may not proceed absent (1) withdrawal of the Objection or (2) entry of an

Order by the Court approving the Noticed De Minimis Asset Sale;

g. If no Objection is timely filed and served, (1) such Noticed De Minimis Asset Sale

shall be deemed final and fully authorized by the Court, and no additional or further

notice or Court approval to consummate the Noticed De Minimis Asset Sale shall be

required, and (2) the Debtors shall be authorized to take any actions that are

reasonable and necessary to close the Noticed De Minimis Sale and obtain the sale

proceeds and pay any necessary fees and expenses incurred in connection therewith,

including paying all reasonable commissions and fees to third-party sale agents, or

auctioneers in connection with the Noticed De Minimis Sale; and

h. The Debtors may consummate a Noticed De Minimis Asset Sale prior to expiration

of the Notice Period only if they obtain written consent to such Noticed De Minimis

Asset Sale from each party that received a Transaction Notice.

3) Effects of De Minimis Asset Sales

a. All buyers will take each De Minimis Asset sold by the Debtors pursuant to the De

Minimis Asset Sale Procedures subject to the terms of the documentation executed in

connection with the applicable De Minimis Asset Sale, which documentation may

(but is not required to) include provisions that the buyers are taking the De Minimis

Assets “as is” and “where is,” without any representations or warranties from the

Debtors as to the quality or fitness of such De Minimis Assets. Buyers will, however,

take title to the (i) Non-Noticed De Minimis Asset Sales with the consent of any

applicable lienholder and (ii) Noticed De Minimis Assets free and clear of any liens

or encumbrances pursuant to section 363(f) of the Bankruptcy Code. All such liens

or encumbrances shall attach to the proceeds of the applicable Noticed De Minimis

Case: 19-30088 Doc# 3575 Filed: 08/16/19 Entered: 08/16/19 17:05:59 Page 10

 of 18
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

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

Asset Sale with the same validity, extent, and priority as had attached to the Noticed 

De Minimis Assets immediately prior to such sale or transfer.

The Debtors submit that continuation of the De Minimis Asset Sales during the Chapter 11 Cases 

is a reasonable and necessary component of the Debtors’ ordinary course operations and establishment 

of the De Minimis Asset Sale Procedures is, therefore, desirable and in the best interests of the estates, 

their creditors, and all parties in interest. The sale or transfer of the De Minimis Assets will generate 

additional value, for the benefit of the Debtors’ estates and all parties in interest. These procedures will 

conserve the Debtors’ resources, promote the efficient administration of these Chapter 11 Cases, and 

make the De Minimis Asset Sales cost-effective in a manner that will provide the most benefit to the 

Debtors’ estates and, accordingly, the Motion should be approved. 

IV. BASIS FOR RELIEF REQUESTED 

For the reasons set forth herein, this Court should grant the relief requested and approve the De 

Minimis Asset Sale Procedures as a sound exercise of the Debtors’ business judgment and in the best 

interests of their estates, creditors, and all parties in interest. 

a. The Court Should Approve the Proposed De Minimis Asset Sale 

Procedures Pursuant to Sections 363 and 105(a) of the Bankruptcy Code 

as a Sound Exercise of the Debtors’ Business Judgment 

Section 363(c)(1) of the Bankruptcy Code authorizes a debtor to “use property of the estate in 

the ordinary course of business without notice or a hearing.” 11 U.S.C. § 363(c)(1). The purpose of this 

section is to provide a debtor with the flexibility to engage in the ordinary transactions required to operate 

its business without unneeded oversight by its creditors or the Court. Meoli v. Am. Med. Serv. of San 

Diego, 287 B.R. 808, 817 n.3 (S.D. Cal. 2003) (stating that 363(c)(1) is designed to provide “wideranging management authority over the debtor”); see also In re First Prot., Inc., 440 B.R. 821, 832–33 

(B.A.P. 9th Cir. 2010) (a debtor may “enter into transactions, including the sale or lease of property of 

the estate, in the ordinary course of business, without notice or a hearing, and to use property of the estate 

in the ordinary course of business without notice or a hearing” when the debtor’s business is being 

operated under sections 1107 and 1108 of the Bankruptcy Code); In re Roth Am., Inc., 975 F.2d 949, 

952 (3d Cir. 1992) (“Section 363 is designed to strike [a] balance, allowing a business to continue its 

daily operations without excessive court or creditor oversight and protecting secured creditors and others 

Case: 19-30088 Doc# 3575 Filed: 08/16/19 Entered: 08/16/19 17:05:59 Page 11

 of 18
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

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

from dissipation of the estate’s assets.”) (citations omitted). Included within the purview of section 

363(c) of the Bankruptcy Code is a debtor’s ability to continue “routine transactions.” See In re Nellson 

Nutraceutical, Inc., 369 B.R. 787, 796 (Bankr. D. Del. 2007) (noting that courts have shown a reluctance 

to interfere in a debtor’s “making of routine, day-to-day business decisions”) (citations omitted). 

The Bankruptcy Code does not define “ordinary course of business.” In re Commercial Mortg. 

& Fin. Co., 414 B.R. 389, 393 (Bankr. N.D. Ill. 2009). “Two tests have emerged for determining whether 

a transaction is within the ordinary course of business for purposes of § 363(c)—the vertical dimension, 

or creditor’s expectation, test, and the horizontal dimension test. If both tests are satisfied, the court 

must conclude that the challenged transaction occurred in the debtor's ordinary course of business.” Aalfs 

v. Wirum (In re Straightline Invs., Inc.), 525 F.3d 870, 879 (9th Cir. 2008). “The vertical dimension, or 

creditor's expectation test, views the disputed transaction from the vantage point of a hypothetical 

creditor and inquires whether the transaction subjects a creditor to economic risks of a nature different 

from those he accepted when he decided to extend credit.” Id. (internal quotations and citations omitted). 

“Under the horizontal dimension test, the question is whether the postpetition transaction is of a type 

that other similar businesses would engage in as ordinary business.” Id. at 880–81 (internal quotations 

and citations omitted). 

Under both the horizontal test and the vertical test, the Debtors’ De Minimis Asset Sales are 

typical of what the Debtors would normally engage in. See Med. Malpractice Ins. Assoc. v. Hirsch (In 

re Lavigne), 114 F.3d 379, 384 (2d Cir. 1997) (finding that “ordinary course of business” is meant “to 

embrace the reasonable expectations of interested parties of the nature of transactions that the debtor 

would likely enter in the course of its normal, daily business.”) (quoting Watford v. S. Cent. Farm Credit, 

ACA (In re Watford), 159 B.R. 597, 599 (M.D. Ga. 1993)); In re Roth Am., Inc., 975 F.2d at 952 (stating 

that section 363 of the Bankruptcy Code is designed to allow a debtor in possession “flexibility to engage 

in ordinary transactions without unnecessary . . . oversight”). Under the horizontal test, sales involving 

De Minimis Assets are typical among utilities and critical to ensure that a utility can efficiently dispose 

of unused assets that are no longer necessary to ongoing operations. Utilities routinely enter into De 

Minimis Asset Sales similar to those covered by the procedures proposed herein. 

Case: 19-30088 Doc# 3575 Filed: 08/16/19 Entered: 08/16/19 17:05:59 Page 12

 of 18
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

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

Under the vertical test, creditors’ reasonable expectations of a debtor’s “ordinary course of 

business” are based on the “debtor’s specific pre-petition business practices and norms and the 

expectation that the debtor will conform to those practices and norms while operating as a debtor-inpossession.” Martino v. First Nat’l Bank of Harvey (In re Garofalo’s Finer Foods, Inc.), 186 B.R. 414, 

425 (N.D. Ill. 1995). Thus, a fundamental characteristic of an “ordinary” postpetition business 

transaction is its similarity to a prepetition business practice. Marshack v. Orange Commercial Credit 

(In re Nat’l Lumber & Supply, Inc.), 184 B.R. 74, 79 (B.A.P. 9th Cir. 1995). The size, nature and type 

of business, and the size and nature of the transactions in question, are all relevant to determining whether 

the transactions at issue are ordinary. United States ex rel. Harrison v. Estate of Deutscher, 115 B.R. 

592, 598 (M.D. Tenn. 1990); In re Johns-Manville Corp., 60 B.R. 612, 617 (Bankr. S.D.N.Y. 1986). 

“Accordingly, a post-petition transaction undertaken by the debtor that is similar in size and nature to 

pre-petition transactions undertaken by the debtor would be within the ordinary course of business.” 

Garofalo’s, 186 B.R. at 426. As set forth above and in the Boken Declaration, the Debtors have regularly 

and routinely entered into De Minimis Asset Sales of similar size, nature, and type of business in 

connection with their daily operations. Accordingly, the Debtors submit that De Minimis Asset Sales 

are authorized pursuant to section 363(c) of the Bankruptcy Code. 

To the extent the De Minimis Asset Sales would be considered outside of the ordinary course, 

the Court has authority to approve such sales and the related procedures pursuant to section 363(b) of 

the Bankruptcy Code. Section 363(b)(1) of the Bankruptcy Code provides, in relevant part, that “[t]he 

trustee, 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). In order to approve the sale of property outside the 

ordinary course of business, a Bankruptcy Court must “find from the evidence presented before him at 

the hearing a good business reason to grant such an application.” In re Lionel Corp., 722 F.2d 1063, 

1071 (2d Cir. 1983); see also In re Chateaugay Corp., 973 F.2d 141, 144–45 (2d Cir. 1992) (affirming 

that the Bankruptcy Court correctly approved an asset sale under 363(b) using the “good business 

reason” standard); In re Borders Grp., Inc., 453 B.R. 477, 482 (Bankr. S.D.N.Y. 2011) (“a debtor often 

satisfies the business judgment standard if ‘the directors of a corporation acted on an informed basis, in 

Case: 19-30088 Doc# 3575 Filed: 08/16/19 Entered: 08/16/19 17:05:59 Page 13

 of 18
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

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

good faith and in the honest belief that the action taken was in the best interests of the company.’”) 

(quoting In re Integrated Res., Inc., 147 B.R. 650, 656 (Bankr. S.D.N.Y. 1992)); In re MF Glob. Ltd., 

535 B.R. 596, 605 (Bankr. S.D.N.Y. 2015) (“The business judgment of a trustee is entitled to great 

deference.”). 

Furthermore, the Court has authority to approve the De Minimis Asset Sale Procedures pursuant 

to section 105 of the Bankruptcy Code, which provides, in relevant part, 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). 

The Debtors submit that the De Minimis Asset Sale Procedures are both an exercise of sound 

business judgment and in the best interests of their estates and all parties in interest. As discussed above, 

the De Minimis Asset Sale Procedures provide for an efficient and cost-effective means of maximizing 

the value to be realized with respect to the De Minimis Assets. Obtaining Court approval for each De 

Minimis Asset Sale would be administratively burdensome to the Court, result in unnecessary legal costs, 

and could significantly reduce the ultimate benefit of the De Minimis Assets to the Debtors’ estates. 

Moreover, the Debtors often face stringent time constraints in meeting the closing deadlines established 

by interested purchasers, as well as in selling or transferring assets before they significantly decline in 

value. The De Minimis Asset Sale Procedures will permit the Debtors to be responsive to the needs of 

interested purchasers (thereby minimizing the risk of lost sales due to delay), while still providing 

appropriate notice to review the proposed transactions. 

b. The De Minimis Asset Sale Procedures Satisfy the 

Notice and Hearing Requirements Under Section 363(b)(1) 

The notice and hearing requirements contained in section 363(b)(1) of the Bankruptcy Code are 

satisfied if appropriate notice and an opportunity for a hearing are given in light of the particular 

circumstances of a proposed transaction. See 11 U.S.C. § 102(1)(A) (defining “after notice and a 

hearing” to mean such notice and opportunity for a hearing “as [are] appropriate in the particular 

circumstances”). Courts have noted that “the notice requirements of bankruptcy law are ‘founded in 

fundamental notions of procedural due process.’” Morgan Olson L.L.C. v. Frederico (In re Grumman 

Olson Indus., Inc.), 467 B.R. 694, 706 (S.D.N.Y. 2012) (citations omitted). Due process requires “notice 

Case: 19-30088 Doc# 3575 Filed: 08/16/19 Entered: 08/16/19 17:05:59 Page 14

 of 18
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

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

reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the 

action and afford them an opportunity to present their objections.” Id. (internal quotation marks and 

citations omitted). 

Bankruptcy Rules 2002(a)(2) and 2002(i) require that a minimum of twenty-one (21) days’ notice 

of the proposed sale of property outside the ordinary course of business be provided by mail to “the 

debtor, the trustee, all creditors and indenture trustees” and any committee appointed under section 1102 

of the Bankruptcy Code, unless a debtor shows “cause.” See Fed. R. Bankr. P. 2002(a)(2) and (i). Once 

the debtor shows “cause,” however, Bankruptcy Rule 2002(a)(2) authorizes this Court to shorten the 

generally applicable 21-day notice period and direct a method of giving notice other than by mail. See

Fed. R. Bankr. P. 2002(a)(2). Moreover, this Court is authorized to limit notice of asset sales outside of 

the ordinary course of a debtor’s business, even without a prior showing of cause, to any official 

committee appointed under section 1102 of the Bankruptcy Code and any creditor or equity holder 

requesting notice. See Fed. R. Bankr. P. 2002(i). 

In addition, the sale or transfer of property outside the ordinary course of business may be 

authorized without an actual hearing, if no party in interest timely requests such a hearing. See 11 U.S.C. 

§ 102(1)(B)(i) (notwithstanding the statutory requirement for “notice and a hearing,” the Bankruptcy 

Code “authorizes an act without an actual hearing if such notice is given properly and if such a hearing 

is not requested timely by a party in interest”). 

The De Minimis Asset Sale Procedures comply with the hearing requirements of the Bankruptcy 

Code, as well as due process, by providing the Core Notice Parties with an opportunity to present 

objections to Noticed De Minimis Asset Sales and to have a hearing. Such Noticed De Minimis Asset 

Sales may be approved without a hearing if no objection is filed with respect thereto. Furthermore, all 

known holders of liens will also receive adequate notice and an opportunity to object. 

Based on the foregoing, the Debtors submit that sufficient cause exists to implement the De 

Minimis Asset Sale Procedures and such procedures will improve the efficiency of the sale process for 

De Minimis Assets and maximize the value of such assets to the Debtors’ estates. 

c. The Proposed De Minimis Asset Sale Procedures Satisfy the Requirements of 

Case: 19-30088 Doc# 3575 Filed: 08/16/19 Entered: 08/16/19 17:05:59 Page 15

 of 18
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

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

Section 363(f) and Allow the Debtors to Sell or Transfer Property Free and Clear 

Pursuant to section 363(f) of the Bankruptcy Code, a debtor may sell property under section 

363(b) free and clear of any liens, claims, encumbrances, and other interests of an entity other than the 

estate if one of the following conditions is satisfied: (i) applicable nonbankruptcy law permits the sale 

of such property free and clear of such interest; (ii) such entity consents; (iii) the interest is a lien and the 

sales price of the property exceeds the value of all liens on the property; (iv) the interest is in bona fide 

dispute; or (v) the holder of the interest could be compelled in a legal or equitable proceeding to accept 

a monetary satisfaction of its interest. 11 U.S.C. § 363(f)(1)‒(5). Section 363(f) is stated in the 

disjunctive; therefore, it is only necessary to meet one of the five conditions listed in that section when 

selling property of the estate. See In re PW, LLC, 391 B.R. 25 (9th Cir. BAP 2008) (analyzing only 

conditions (f)(3) and (f)(5), thus implying the satisfaction of any requirement warrants the sale of 

property free and clear of liens and interests); In re Borders Grp., Inc., 453 B.R. at 483‒84 (noting that 

the debtor can sell its property “free and clear of any interest” if “at least one” of the five conditions 

under section 363(f) is met); see also In re MF Glob. Inc., 467 B.R. 726, 730 (Bankr. S.D.N.Y. 2012) 

(“Satisfaction of any of those requirements [of section 363(f)(1)-(5)] suffices to permit the sale of the 

property free and clear of liens and interests.”). 

The Debtors submit that the De Minimis Asset Sale Procedures satisfy the requirements of 

section 363(f) of the Bankruptcy Code. Pursuant to the De Minimis Asset Sale Procedures, to the extent 

there are any known holders of liens on the De Minimis Assets, the Debtors will provide such parties 

with a Transaction Notice prior to the disposition of the applicable De Minimis Asset. Absent any 

objection to a Noticed De Minimis Asset Sale, a holder of a lien or encumbrance shall be deemed to 

consent to the Noticed De Minimis Asset Sale and such asset may be sold free and clear of such lien. 

See In re Borders Grp., Inc., 453 B.R. at 484 (“Under section 363(f)(2), a lienholder who receives notice 

of a sale but does not object within the prescribed time period is deemed to consent to the proposed sale, 

and assets thereafter may be sold free and clear of liens.”); see also In re Enron Corp., Case No. 01‒

16034 (AJG), 2003 WL 21755006, at *2 (Bankr. S.D.N.Y. July 28, 2003) (order deeming all parties who 

did not object to proposed sale to have consented under section 363(f)(2)). As noted above, the interests 

of a holder of a lien will attach to the proceeds of the sale or transfer, subject to any rights and defenses 

Case: 19-30088 Doc# 3575 Filed: 08/16/19 Entered: 08/16/19 17:05:59 Page 16

 of 18
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

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

of the Debtors with respect thereto. To the extent consent of a lienholder is not obtained or deemed to 

have been obtained, the Debtors submit that with respect to any proposed transaction, the holder of any 

lien or other encumbrance could be compelled in a legal or equitable proceeding to accept a monetary 

satisfaction of its interest.

V. REQUEST FOR BANKRUPTCY RULE 6004 WAIVERS 

The Debtors request a waiver of the notice requirements under Bankruptcy Rule 6004(a) and any 

stay of the order granting the relief requested herein pursuant to Bankruptcy Rule 6004(h). As explained 

above, the relief requested herein is in the best interest of the Debtors, their estates, creditors, 

shareholders, and all other parties. Accordingly, ample cause exists to justify the waiver of the notice 

requirements under Bankruptcy Rule 6004(a) and the fourteen-day stay imposed by Bankruptcy Rule 

6004(h), to the extent such notice requirements and stay apply. 

VI. NOTICE 

Notice of this Motion will be provided to (i) the Office of the U.S. Trustee for Region 17 (Attn: 

Andrew R. Vara, Esq. and Timothy Laffredi, Esq.); (ii) counsel to the Creditors Committee; (iii) counsel 

to Tort Claimants Committee; (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; and (xii) 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. 

Case: 19-30088 Doc# 3575 Filed: 08/16/19 Entered: 08/16/19 17:05:59 Page 17

 of 18
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

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

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

herein as a sound exercise of the Debtors’ business judgment and in the best interests of their estates, 

creditors, shareholders, and all other parties interests, and (ii) the Debtors’ such other and further relief 

as the Court may deem just and appropriate. 

Dated: August 16, 2019 

 WEIL, GOTSHAL & MANGES LLP 

KELLER & BENVENUTTI LLP 

By: /s/ Matthew P. Goren 

 Matthew P. Goren 

Attorneys for Debtors 

and Debtors in Possession 

Case: 19-30088 Doc# 3575 Filed: 08/16/19 Entered: 08/16/19 17:05:59 Page 18

 of 18