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3190691 -1- 

WILSON UTILITY CONSTRUCTION COMPANY'S RESPONSE TO EMERGENCY PAYMENT MOTIONS 

Sblend A. Sblendorio (SBN 109903) 

HOGE, FENTON, JONES & APPEL, INC. 

4309 Hacienda Drive, Suite 350 

Pleasanton, California 94588-2746 

Phone: 925.224.7780 

Fax: 925.224.7782 

Email: sblend.sblendorio@hogefenton.com 

Howard M. Levine (Oregon State Bar No. 800730) 

(Admitted Pro Hac Vice on 2/1/19) 

SUSSMAN SHANK LLP 

1000 S.W. Broadway, Suite 1400 

Portland, OR 97205-3089 

Phone: 503.227.1111 

Fax: 503.248.0130 

Email: hlevine@sussmanshank.com 

Attorneys for Wilson Utility Construction Company 

UNITED STATES BANKRUPTCY COURT 

NORTHERN DISTRICT OF CALIFORNIA, SAN FRANCISCO DIVISION 

In re 

PG&E CORPORATION, 

and 

PACIFIC GAS AND ELECTRIC 

COMPANY, 

Debtors. 

 Affects PG&E Corporation 

 Affects Pacific Gas and Electric 

Company 

 Affects both Debtors 

*All papers shall be filed in the Lead 

Case No. 19-30088 (DM). 

 Case No. 19-30088 (DM) 

and 19-30089 (DM 

Chapter 11 

WILSON UTILITY CONSTRUCTION 

COMPANY’S RESPONSE IN SUPPORT OF 

MOTION OF DEBTORS PURSUANT TO 11 

U.S.C. §§ 105(A), 363(B), AND 503(B)(9) AND 

F.R.B.P. 6003 AND 6004 FOR INTERIM AND 

FINAL AUTHORITY TO PAY PREPETITION 

OBLIGATIONS OWED TO CERTAIN 

SAFETY AND RELIABILITY, OUTAGE, AND 

NUCLEAR FACILITY SUPPLIERS (ECF NO. 

12); AND THE MOTION OF THE DEBTORS 

PURSUANT TO 11 U.S.C. §§ 105(A), 363(B), 

AND 503(B), AND F.R.B.P. 6003 AND 6004 (I) 

FOR INTERIM AND FINAL AUTHORITY TO 

PAY PREPETITION OBLIGATIONS OWED 

TO SHIPPERS, WAREHOUSEMEN, AND 

OTHER LIEN CLAIMANTS, AND (II) 

GRANTING ADMINISTRATIVE EXPENSE 

PRIORITY STATUS FOR CLAIMS ARISING 

FROM GOODS DELIVERED TO DEBTORS’ 

POSTPETITION (ECF NO. 13)

Date: February 27, 2019 

Time: 9:30 a.m. 

Courtroom: 17 

Case: 19-30088 Doc# 496 Filed: 02/20/19 Entered: 02/20/19 12:33:50 Page 1 of 9
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3190691 -2- 

WILSON UTILITY CONSTRUCTION COMPANY'S RESPONSE TO EMERGENCY PAYMENT MOTIONS 

 Wilson Utility Construction Company (“Wilson Construction”) files this Response in 

Support of the Motion of Debtors Pursuant to 11 U.S.C. §§ 105(a), 363(b), and 503(b)(9) and 

F.R.B.P. 6003 and 6004 for Interim and Final Authority to Pay Prepetition Obligations Owed to 

Certain Safety and Reliability, Outage, and Nuclear Facility Suppliers (ECF No. 12) (the “Critical 

Vendors’ Motion”) and the Motion of the Debtors Pursuant to 11 U.S.C. §§ 105(a), 363(b), and 

503(b), and F.R.B.P. 6003 and 6004 (i) for Interim and Final Authority to Pay Prepetition 

Obligations Owed to Shippers, Warehousemen, and Other Lien Claimants, and (ii) Granting 

Administrative Expense Priority Status for Claims Arising from Goods Delivered to Debtors 

Postpetition (ECF No. 13)(the “Lien Creditors’ Motion”) (the foregoing are collectively the 

“Emergency Payment Motions”). This Response is supported by the record in this case and the 

Declaration of Brad Proctor filed contemporaneously herewith. 

INTRODUCTION AND BACKGROUND 

 1. Wilson Construction is a major creditor of the Debtors, is one of the Debtors’ 

Operational Integrity Suppliers as that term is defined in the Critical Vendors’ Motion, and holds, 

as of the Chapter 11 filing date (the “Petition Date”), a claim that exceeds $12.3 million. Declaration 

of Brad Proctor, ¶¶ 3-4 (“Proctor Decl.”). Wilson Construction’s claim is unsecured, but is largely 

lienable as permitted by California law, and is subject to the relief sought in the Debtors’ Lien 

Creditors’ Motion. 

2. Wilson Construction is also a party with PG&E Company (“PG&E”) to one or more 

executory contracts governing the work Wilson Construction does for PG&E. Subsequent to the 

Petition Date, PG&E has not paid Wilson Construction on account of its prepetition claim. Proctor 

Decl., ¶ 4. 

3. Since 2012, Wilson Construction maintained a continuous presence in California as 

part of PG&E’s effort to replace and repair an aged infrastructure, as well as make improvements to 

the electrical system with respect to Reliability, Capacity, NERC requirements, and Fire Hardening 

projects. In the past three (3) years, Wilson Construction crews participated in most of the major 

Transmission reliability and NERC projects that were scheduled and awarded through the 

competitive bid process. In 2013, Wilson Construction bid for, and was awarded, a major portion 

Case: 19-30088 Doc# 496 Filed: 02/20/19 Entered: 02/20/19 12:33:50 Page 2 of 9
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3190691 -3- 

WILSON UTILITY CONSTRUCTION COMPANY'S RESPONSE TO EMERGENCY PAYMENT MOTIONS 

of the Electrical Distribution Performance Partnership Pole Replacement Program ("EDPP"). 

Wilson Construction is currently in the fifth year of that program. Wilson Construction replaced 

thousands of deteriorated poles in the execution of the EDPP Partnership Program. Proctor Decl., 

¶ 5. 

4. In 2018, Wilson Construction's line crews participated in an extensive program 

aimed at making corrections to identified EC Tag Corrections. Wilson Construction’s crews were 

successful in completing approximately 8,000 tags within the CPUC mandated time frame, and 

within PG&E’s budget. It is these very same types of EC Tag Corrections that PG&E is currently 

attempting to identify through the ongoing Inspection Program on both its Distribution and 

Transmission line infrastructures. Proctor Decl., ¶ 6. 

5. Throughout this period of ongoing service to PG&E, Wilson Construction was 

regularly called upon to provide emergency relief and restoration efforts for unscheduled outages 

resulting from wind, rain, snow, and fire. When necessary, and when requested to do so, Wilson 

Construction imported line crews from outside the PG&E’s service territories to supplement its 

California line crews and operational personnel. In addition to providing aid and support during 

these major calamities, Wilson Construction crews and personnel often responded to PG&E’s 

request for help on Routine Wire Down calls resulting from car hit poles, and similar disruptions to 

electrical service. Most recently, Wilson Construction crews worked on emergency storm 

restoration. Since January 1, 2019, Wilson Construction crews were deployed to respond to 

emergency storm restoration continually from as recently as January 4-8, and January 17-20, 2019. 

Wilson Construction's crews and field leadership are still working at restoration as of the time of 

this filing. Proctor Decl., ¶ 7. 

6. Wilson Construction's work for PG&E is often supported by select subcontractors 

who are predominately Disadvantaged Business Entities ("DBE"), who demonstrated consistent 

ability to work on short notice, especially during storm work. Each DBE is heavily dependent on 

revenue from working for Wilson Construction, and each is directly and adversely impacted by the 

bankruptcy petition. Proctor Decl., ¶ 8. 

7. Due to Wilson Construction's extensive knowledge of PG&E's system, and its cadre 

Case: 19-30088 Doc# 496 Filed: 02/20/19 Entered: 02/20/19 12:33:50 Page 3 of 9
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3190691 -4- 

WILSON UTILITY CONSTRUCTION COMPANY'S RESPONSE TO EMERGENCY PAYMENT MOTIONS 

of seasoned field leaders and crews, Wilson Construction was recently summoned to a meeting 

held by PG&E personnel to advise it on constructability and scheduling protocols as PG&E 

prepares to undertake various fire hardening projects. Wilson Construction’s personnel includes 

many local California residents, some of whom were personally affected by the recent wildfires. 

Wilson Construction's team knows PG&E's expectations regarding safety, quality, and construction 

standards, and also understands the importance of affordability. Proctor Decl., ¶ 9. 

8. As explained above, Wilson Construction provided years of consistent, critical, and 

reliable service to PG&E and is best positioned to do so in the future. By any definition, Wilson 

Construction is a critical vendor –an Operational Integrity Supplier -- a critical and indispensable 

vendor to PG&E that believes strongly its prepetition claims must be addressed as the Emergency 

Payment Motions contemplate. Moreover, due to the nature of the work Wilson Construction 

performed prepetition, Wilson is entitled to assert liens as security for payment of Wilson 

Construction’s prepetition claims (“Lien Creditor”), an action that Wilson Construction has not yet 

taken but is in the process of implementing. 

ARGUMENT 

A. Wilson Construction Would Benefit from Granting the Emergency Payment Motions. 

 It is imperative that the Court grant the Emergency Payment Motions. Certainly Wilson 

Construction would potentially benefit if the Court granted the Emergency Prepayment Motions, 

whether as an Operational Integrity Supplier or as a potential Lien Creditor. Wilson Construction 

is a family business manifestly hurt by this Chapter 11 filing and has significant obligations to 

subcontractors, vendors, suppliers, and employees. Wilson Construction requests the payments 

from PG&E for its prepetition work to facilitate Wilson Construction’s ongoing postpetition 

operations to assist PG&E. As an Operational Integrity Supplier or potential Lien Creditor, Wilson 

is entitled to be paid for its prepetition claim in order to continue to do the critical work PG&E needs 

performed postpetition.1

 

 

1

 During the hearing held on January 31, 2019, the Court suggested that it would entertain a process 

by which any creditor who believes it to be an Operational Integrity Supplier or Lien Creditor who 

is not paid as a critical vendor should be entitled to present to the Court evidence to seek an order 

to require PG&E to pay such vendor in the same manner as other equally situated creditors. 

Case: 19-30088 Doc# 496 Filed: 02/20/19 Entered: 02/20/19 12:33:50 Page 4 of 9
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3190691 -5- 

WILSON UTILITY CONSTRUCTION COMPANY'S RESPONSE TO EMERGENCY PAYMENT MOTIONS 

B. The Estate Must Be Protected from an Administrative Claim Caused by a Postpetition 

Fire. 

 As a major unsecured trade creditor, Wilson Construction wants the estate (and Wilson 

Construction’s prepetition claim) to be protected from the risk of a catastrophic postpetition fire. 

Such a fire could leave the estate with an enormous unliquidated administrative expense claim that 

could undermine the rights of all prepetition creditors, massively complicate already complex cases, 

and delay resolution of these cases. If past is prologue, and if aggressive fire mitigation efforts are 

not undertaken, then the estate runs a substantial risk that such a postpetition catastrophic fire could 

occur. The risk of such an event can be mitigated by permitting PG&E, indeed requiring PG&E, to 

use its resources to pay Operational Integrity Suppliers and Lien Creditors so that those vendors will 

be best positioned, and properly funded, staffed, and incentivized to provide the urgently needed 

services necessary to protect the estate from such an avoidable destructive event.2

 A fundamental Chapter 11 principle is that the debtors have an obligation to protect estate 

assets, and, especially, to limit administrative claims. As explained in Burlington Northern Railroad 

Co. v. Dant & Russell, Inc., 853 F2d 700, 706 (9th Cir. 1988): 

The statute [11 U.S.C. 503(b)(1)(A)] is explicit. Any claim for administrative 

expenses and costs must be the actual and necessary costs of preserving the estate 

for the benefit of its creditors. Matter of Baldwin-United Corporation, 43 B.R. 443, 

451 (S.D. Ohio 1984). The terms "actual" and "necessary" are construed narrowly 

so as "to keep fees and administrative costs at a minimum." In re O.P.M. Leasing 

Services, Inc., 23 B.R. 104, 121 (Bankr.S.D.N.Y.1982). 

*** 

Additionally, keeping costs to a minimum serves the overwhelming concern of the 

Code: Preservation of the estate. [Citations omitted.] This limitation is necessary to 

protect the limited assets of the estate for the benefit of the unsecured creditors' interests 

and is particularly important in a Chapter 11 case where a partial liquidation is necessary 

to facilitate reorganization. 

Paying the prepetition claims of the Operational Integrity Suppliers and Lien Creditors 

 

2

 Whether a postpetition fire occurs and if it does, whether it will rise to the level of an administrative 

expense with priority over prepetition unsecured claims, are open questions that only the future will 

answer. However, the risk that such a fire could be an administrative expense is real and that risk 

must be minimized by PG&E proactively paying for aggressive fire mitigation efforts. See Reading 

v. Brown, 391 U.S. 471, 88 S.Ct. 1759, 20 L.Ed.2d 751 (1968) where the Court determined that an 

award of tort damages to victims of a fire caused by the Chapter XI receiver's negligence was entitled 

to administrative expense priority, despite the fact that victims did not transact with the receiver, 

and the estate did not benefit from the event. Reading, 391 U.S. at 485, 88 S.Ct. 1759. 

Case: 19-30088 Doc# 496 Filed: 02/20/19 Entered: 02/20/19 12:33:50 Page 5 of 9
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3190691 -6- 

WILSON UTILITY CONSTRUCTION COMPANY'S RESPONSE TO EMERGENCY PAYMENT MOTIONS 

allows them to work for PG&E to provide advance protection from fire, and serves to protect the 

estate from an unnecessary administrative expense. Additionally, doing so could protect property 

and save lives. PG&E should aggressively carry out and pay for the necessary mitigation work and 

encourage its vendors to work for PG&E postpetition by paying their prepetition claims, because 

creditors such as Wilson Construction are genuinely critical, if not indispensable to PG&E and its 

hopefully successful exit from Chapter 11. 

 All prepetition creditors should support the Emergency Payment Motions and the goal of 

protecting their potential recovery from dilution or elimination that could result from a catastrophic 

postpetition fire. Creditors who oppose the Emergency Payment Motions are working against their 

own interests. They should want their prepetition claims protected to the extent possible. PG&E’s 

projected cost to help mitigate fire risk by paying Operational Integrity Suppliers and Lien Creditors 

on the prepetition claims is modest compared to the total amount of the prepetition unsecured claims 

(whether they be bond, subrogation, trade, property damage, or death claims) that could be 

protected, and the size of the potential postpetition fire loss claims that could be paid ahead of all of 

those prepetition unsecured claims. 

C. Granting the Emergency Payment Motions and Paying Operational Integrity 

Suppliers and Lien Creditors is Consistent with PG&E’s Statements in United States 

of America v. Pacific Gas and Electric Company. 

 Granting the Emergency Payment Motion would be consistent with the goals PG&E argued 

in the criminal case against it captioned United States of America v. Pacific Gas and Electric 

Company (U.S. District Court for the Northern District of California, Case No. 14-cr-00175). In 

PG&E’s Response to Order to Show Cause Why PG&E’s Conditions of Probation Should Not Be 

Modified filed on January 23, 2019 (Dkt. No. 976), PG&E represented, among other things, to Judge 

Alsup, that: 

PG&E understands and shares the Court’s concern about the human and financial 

cost of the wildfires and the death and destruction they have wrought. And PG&E 

recognizes its fundamental obligations to the State of California and its residents and 

businesses to operate its electric and gas system safely, a task that has taken on 

increasing urgency and complexity in light of the effects of climate change, which 

then-Governor Brown described as the “new abnormal.” The problems are grave; 

they are substantial—PG&E has nearly 100,000 miles of overhead lines across 

Northern California; and they need to be solved as quickly as possible. PG&E is 

committed to making that happen. PG&E knows that it must play a leading role to 

Case: 19-30088 Doc# 496 Filed: 02/20/19 Entered: 02/20/19 12:33:50 Page 6 of 9
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WILSON UTILITY CONSTRUCTION COMPANY'S RESPONSE TO EMERGENCY PAYMENT MOTIONS 

implement changes to substantially mitigate the risk of wildfire, and PG&E is 

embracing that role. (Emphasis added)(at 1).

*** 

But far more importantly, and less publicly, PG&E has focused substantial resources 

and efforts since the October 2017 North Bay Wildfires to help prevent catastrophic 

wildfires from occurring. Working closely with regulators, state and federal officials, 

communities, and interest groups, PG&E has developed a risk based approach to 

identifying the highest risk portions of its system so that it can engage in enhanced 

vegetation management and system hardening (such as installing insulated wire), and 

it has developed a comprehensive de-energization plan that it continues to update 

and refine. And since the Camp Fire, PG&E has embarked upon an enhanced process 

to inspect and repair (where necessary) more than 700,000 structures (distribution 

and transmission towers and poles) across nearly 30,500 miles of the Company’s 

electric system in areas with the greatest potential risk of fire. This process was 

developed late last year and was implemented immediately with a focus on getting 

as much work done in high risk areas as possible by the end of May 2019. (Emphasis 

added) (at 1-2). 

*** 

In short, PG&E agrees with the Court that the status quo is unacceptable, and PG&E 

is committed to working aggressively and expeditiously with state and federal 

officials on system maintenance and upgrades and on wildfire mitigation efforts. 

(Emphasis added)(at 6). 

PG&E is asking this Court to facilitate, in part, what it told the U.S. District Court judge it 

is going to do, work aggressively on upgrades and wildfire mitigation—a goal shared by Wilson 

Construction, both as an unsecured creditor whose claim is at risk, and as an Operational Integrity 

Supplier and potential Lien Creditor that stands to benefit if the Emergency Payment Motions are 

granted. Much of the work PG&E told the District Court it is doing and must do, is work Wilson 

Construction performed for PG&E in the past, and is continuing to perform. 

D. The Facts and Urgency Requires the Emergency Payment Motions Be Granted.

 None of the court decisions PG&E cites in its Emergency Payment Motions where critical 

vendor payments were permitted, involved the risk of a catastrophic human, property, and economic 

disaster that a postpetition fire could cause in these cases. If critical vendor payments had been 

allowed under such relatively benign circumstances as they were in the cases PG&E relies upon, 

critical vendor payments should certainly be authorized, if not mandated in these cases to protect 

this estate, property, and human life. 

 By authorizing critical vendor payments to the Debtors’ Operational Integrity Suppliers and 

Case: 19-30088 Doc# 496 Filed: 02/20/19 Entered: 02/20/19 12:33:50 Page 7 of 9
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WILSON UTILITY CONSTRUCTION COMPANY'S RESPONSE TO EMERGENCY PAYMENT MOTIONS 

Lien Creditors, the Court will advance at least three important goals—all of which are consistent 

with the principles of Chapter 11 and goals of restructuring and rehabilitating the Debtors: 

 (a) Mitigate future fire risk and the saving of life and property; 

 (b) Help protect the estate from a potentially disastrously large administrative claim to 

ensure creditors’ prepetition claims are protected; and 

 (c) Help protect California, the fifth largest economy in the world, from a possible 

economic disaster.3

 If there were ever cases where the “doctrine of necessity” applied, these are the cases. These 

cases present exponentially more compelling needs than cases where purchasing inventory or even 

paying wages were found to be “critical.” The need to preserve this estate and to protect its creditors 

is self-evident; the need to protect human life and property is undeniable and irrefutable; and the 

need to facilitate the Debtors’ rehabilitation and reorganization is fundamental to Chapter 11, all of 

which make for the most compelling argument of any cases cited for the application of the “doctrine 

of necessity.” 

/// 

/// 

/// 

/// 

/// 

/// 

/// 

/// 

/// 

/// 

 

 

3

 “The Pleasure and Pain of Being California, the World’s 5th-Largest Economy.” New York Times, 

May 7, 2018. 

Case: 19-30088 Doc# 496 Filed: 02/20/19 Entered: 02/20/19 12:33:50 Page 8 of 9
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3190691 -9- 

WILSON UTILITY CONSTRUCTION COMPANY'S RESPONSE TO EMERGENCY PAYMENT MOTIONS 

 WHEREFORE, for the foregoing reasons, the Court should grant the Emergency Payment 

Motions, and the Court should include a procedure for any creditor who believes it to be an 

Operational Integrity Supplier or Lien Creditor who is not paid as a critical vendor to move the 

Court for a hearing at which it could present evidence to support an order to require the Debtors to 

pay such vendor in the same manner as other equally situated creditors. 

DATED: February 20, 2019 HOGE, FENTON, JONES & APPEL, INC. 

By: /s/ Sblend A. Sblendorio 

 Sblend A. Sblendorio 

Attorneys for Wilson Utility Construction 

Company

DATED: February 20, 2019 SUSSMAN SHANK LLP 

By: /s/ Howard M. Levine 

 Howard M. Levine (Oregon State Bar No. 800730) 

(Admitted Pro Hac Vice on 2/1/19) 

Attorneys for Wilson Utility Construction 

Company

Case: 19-30088 Doc# 496 Filed: 02/20/19 Entered: 02/20/19 12:33:50 Page 9 of 9