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AKIN GUMP STRAUSS HAUER & FELD LLP 

Michael S. Stamer (pro hac vice) 

Ira S. Dizengoff (pro hac vice) 

David H. Botter (pro hac vice) 

Abid Qureshi (pro hac vice) 

One Bryant Park 

New York, New York 10036 

Telephone: (212) 872-1000 

Facsimile: (212) 872-1002 

Email: mstamer@akingump.com 

 idizengoff@akingump.com 

 dbotter@akingump.com 

 aqureshi@akingump.com 

AKIN GUMP STRAUSS HAUER & FELD LLP 

Ashley Vinson Crawford (SBN 257246) 

580 California Street 

Suite 1500 

San Francisco, CA 94104 

Telephone: (415) 765-9500 

Facsimile: (415) 765-9501 

Email: avcrawford@akingump.com 

 

Counsel to the Ad Hoc Committee of Senior Unsecured 

Noteholders of Pacific Gas and Electric Company 

UNITED STATES BANKRUPTCY COURT 

NORTHERN DISTRICT OF CALIFORNIA 

SAN FRANCISCO DIVISION 

In re: 

PG&E CORPORATION, 

-andPACIFIC GAS AND ELECTRIC 

COMPANY,

Bankruptcy Case 

No. 19-30088 (DM) 

Chapter 11 

(Lead Case) 

(Jointly Administered) 

LIMITED OBJECTION OF THE AD HOC 

COMMITTEE OF SENIOR UNSECURED 

NOTEHOLDERS TO DEBTORS’ MOTION 

TO ENTER INTO RESTRUCTURING 

SUPPORT AGREEMENT WITH THE 

OFFICIAL COMMITTEE OF TORT 

CLAIMANTS, CONSENTING FIRE 

CLAIMANT PROFESSIONALS AND 

SHAREHOLDER PROPONENTS

Hearing 

Date: December 17, 2019 

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

Place: Courtroom 17 

 450 Golden Gate Ave, 16th Floor 

 San Francisco, CA 94102 

Re: Docket Nos. 5038 

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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The Ad Hoc Committee of Senior Unsecured Noteholders of Pacific Gas and Electric Company 

(the “Ad Hoc Committee”)1 in the above-captioned chapter 11 cases of Pacific Gas and Electric 

Company (the “Utility”) and PG&E Corporation (“PG&E” and, together with the Utility, the “Debtors”), 

by its undersigned counsel, Akin Gump Strauss Hauer & Feld LLP, hereby submits this limited objection 

(the “Limited Objection”) to the 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 and TCC to Enter into 

Restructuring Support Agreement with the TCC, Consenting Fire Claimant Professionals, and 

Shareholder Proponents, and (II) Granting Related Relief [Docket No. 3992] (the “Motion”).2 In 

support of this Limited Objection, the Ad Hoc Committee respectfully states the following: 

LIMITED OBJECTION 

1. The Debtors have, at last, committed to compensating fire victims and putting an end to 

an expensive and now unnecessary estimation process by settling the Fire Victim Claims for $13.5 

billion (the “Fire Victim Claims Settlement”), which is the same aggregate claim amount agreed to 

earlier in these cases by the Ad Hoc Committee and the Official Committee of Tort Claimants (the 

“TCC”). The Debtors have represented to this Court that the terms of the Fire Victim Claims 

Settlement contained in the restructuring support agreement with the TCC and Consenting Fire 

Claimant Professionals (the “Debtor/TCC RSA”) are “fair and reasonable and in the best interests of 

the Debtors, their estates, creditors, and all other stakeholders.” See Declaration of Jason P. Wells in 

Support of 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 and TCC to Enter into Restructuring 

Support Agreement with the TCC, Consenting Fire Claimant Professionals, and Shareholder 

Proponents, and (II) Granting Related Relief [Docket No. 5039], 5:4-5. Thus, the amount to be paid to 

the holders of Fire Victim Claims from the estates is no longer in dispute and the need for estimation 

of such claims, under any plan of reorganization, has been foreclosed. The settlement and liquidation 

 

1

 The Ad Hoc Committee filed an amended verified statement pursuant to Rule 2019 of the Federal Rules of Bankruptcy 

Procedure on October 21, 2019 [Docket No. 4369]. 

2

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

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of the Fire Victim Claims and the termination of the estimation process, which the Debtors and their 

equity holders have used to hold these chapter 11 cases hostage, now clears the way for an evaluation 

of the competing plans purely on the basis of their merits and their ability to satisfy the requirements of 

A.B. 1054. 

2. Since the filing of the Motion, the Governor’s office declared that the plan jointly filed 

by the Debtors and certain equity holder co-proponents on December 12, 2019 (the “Debtor/Equity 

Plan”) [Docket No. 5101] fails to satisfy A.B. 1054. Specifically, in a letter (the “December 13 

Letter”) addressed to the Debtors’ chief executive officer, and attached hereto as Exhibit A, Governor 

Newsom set forth with particularity how the Debtor/Equity Plan “falls woefully short” of meeting the 

requirements of A.B. 1054. December 13 Letter at 3. Because the Debtor/Equity Plan does not 

comply with A.B. 1054, the Debtor/Equity Plan is not feasible, as the reorganized Debtors will be 

“without access to the wildfire fund established under AB 1054.” Id. at 5. In addition, pursuant to its 

express terms, unless the Debtors resolve the numerous identified deficiencies in the Debtor/Equity 

Plan by Tuesday, December 17, the Debtor/TCC RSA will be automatically terminated by the time the 

hearing on the Motion commences. See Debtor/TCC RSA, § 3(a)(iii). However, even if the 

Debtor/TCC RSA is not automatically terminated, the Debtor/Equity Plan is a manifestly inferior plan 

of reorganization for all stakeholders, including constituents of the State of California, other than the 

equity holders who control the Debtors’ boards of directors. 

3. The superiority of the plan of reorganization filed jointly by the TCC and the Ad Hoc 

Committee (the “TCC/AHC Plan”) [Docket No. 4257], now that all relevant parties in interest are in 

agreement with respect to the allowance of the Fire Victim Claims, should be obvious to this Court and 

all parties in interest. First, the TCC/AHC Plan delivers to the holders of the Fire Victim Claims (x) 

more upfront cash and (y) more valuable equity in the reorganized Debtors based upon materially less 

debt and a far healthier capital structure for the reorganized Debtors. The TCC/AHC Plan provides 

victims with significantly more favorable consideration while also providing the reorganized Debtors 

with the billions of dollars of new capital required to modernize and “harden” their electrical grid 

against the risk of future catastrophic wildfires without the need to pass off these costs to ratepayers, as 

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required by A.B. 1054. Second, the TCC/AHC Plan continues to be backed by fully-committed 

financing, while the Debtor/Equity Plan has enormous execution risk, relying in large part on over $34 

billion of so-called “bridge” financing that will need to be refinanced within a year of emergence, 

leaving the Debtors exposed to near-term financial failure. Third, the TCC/AHC Plan provides for a 

complete overhaul and reimagining of the management and corporate governance of the Debtors, yet 

another requirement of A.B. 1054. In contrast, the Debtor/Equity Plan will entrench the individuals 

and governance structures that were in place during the disastrous wildfires that led to the Debtors’ 

chapter 11 cases, and more recently, the “public safety power shutoff events.” 

4. Moreover, approval of the Fire Victim Claims Settlement does not render the 

Debtor/Equity Plan the sole confirmable plan as the Debtors would have the Court believe. Rather, the 

Debtor/Equity Plan remains unconfirmable even with the support of the TCC, as the Governor’s office 

has clearly stated that the Debtor/Equity Plan fails to comply with A.B. 1054. In addition, approval of 

the Fire Victim Claims Settlement does not render the TCC/AHC Plan unconfirmable. In fact, if the 

“anti-competitive” provisions (as described in more detail below) of the Debtor/TCC RSA are 

removed, it is difficult to believe that any holders of Fire Victim Claims would accept a plan that pays 

less on account of their claims and is less certain to be confirmed and actually pay anything to them at 

all. 

5. While the Ad Hoc Committee does not oppose the approval of the Fire Victim Claims 

Settlement to the extent it liquidates the Fire Victim Claims for the benefit of the estates, as with the 

restructuring support agreement between the Debtors and the Ad Hoc Subrogation Group, it objects to 

the approval of the “anti-competitive” provisions of the Debtor/TCC RSA that seek to foreclose the 

competitive plan process mandated by this Court and unfairly disadvantage the TCC/AHC Plan. These 

“anti-competitive” provisions exist solely to benefit the Debtors’ controlling equity holders but harm 

the interests of every other stakeholder of the Debtors, including the victims themselves. Specifically, 

the following provisions of the Debtor/TCC RSA3

 should not be approved: 

 

3

 The Ad Hoc Committee previously opposed similar provisions with respect to the restructuring support agreement 

between the Debtors and the Ad Hoc Subrogation Group, which remain subject to a decision of the Court. See Objection 

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a. Section 2(b) – Section 2(b) requires the TCC to file a notice withdrawing as a 

proponent of the TCC/AHC Plan upon the entry of an order approving the 

Debtor/TCC RSA. Aside from the TCC’s potential breach of fiduciary duty by 

supporting a plan of reorganization that provides for inferior treatment for their 

constituents, this provision of the Debtor/TCC RSA appears to be intended to take 

away the TCC’s constituents’ ability to choose the better plan and harms all other 

parties in interest. 

b. Section 2(n) – Section 2(n) requires each party to the Debtor/TCC RSA, including 

the Consenting Fire Claimant Professionals to “oppose efforts and procedures to (i) 

solicit acceptances by any creditors of, and (ii) seek confirmation, consummation or 

implementation of the Alternative Plan.” This provision appears to be designed to 

prevent the TCC/AHC Plan from proceeding to solicitation and confirmation and 

may also require the Consenting Fire Claimant Professionals to encourage the 

holders of Fire Victim Claims they represent to vote against the TCC/AHC Plan. 

c. Section 2(l) – Section 2(l) requires the Requisite Consenting Fire Claimant

Professionals to provide non-consenting counsel and their clients with written 

information to “facilitate” these holders making “a meaningful and informed 

participation and voting decision on the [Debtor/Equity Plan].” This appears to be 

disguised solicitation in violation of section 1125(d) of the Bankruptcy Code, 

designed to provide an unfair advantage to the Debtor/Equity Plan. Such 

communications should await the approval of a joint disclosure statement on the 

competing plans so as to ensure a level playing field. 

d. Sections 3(a)(ii), (d)(ii) – Section 3(a)(ii) provides, in relevant part, that the 

Debtor/TCC RSA will automatically terminate if the Debtor/Equity Plan is not 

confirmed by June 30, 2020. Pursuant to section 3(d)(ii), the estimation proceeding 

will immediately recommence if the Debtor/TCC RSA is terminated. Collectively, 

these provisions make clear that the Fire Victim Claims Settlement would not be 

binding if the TCC/AHC Plan is confirmed. 

6. As the Ad Hoc Committee argued in the Subrogation RSA Objection, court approval of 

a settlement pursuant to Bankruptcy Rule 9019 binds the estate to the terms of the compromise entered 

into by the debtor in possession. In re Flores, 2013 WL 6186262, at *8 (Bankr. C.D. Cal. Nov. 25, 

2013) (“The purpose and effect of seeking court approval of a compromise under Rule 9019 is to bind 

the bankruptcy estate to the terms of any bargain struck by a trustee or debtor-in-possession.”). This is 

because a debtor-in-possession acts in a fiduciary capacity to the estate, not in its own interest or the 

interest of its equity holders. Therefore, any settlement approved by this Court must benefit the estates 

as a whole, not just the Debtors and their equity holders, and must be able to be incorporated into the 

 

of the Ad Hoc Committee of Senior Unsecured Noteholders to Debtors’ Motion to Enter into Restructuring Support 

Agreement with the Consenting Subrogation Claimholders [Docket No. 4241] (the “Subrogation RSA Objection”). 

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plan of reorganization that is determined to be in the best interests of all and is ultimately confirmed by 

the Court. The Court must, therefore, remove any provision from the Debtor/TCC RSA that conditions 

the Fire Victim Settlement on confirmation of the Debtor/Equity Plan, which clearly provides the 

Debtors and their equity holders with an unfair advantage and is inconsistent with the Debtors’ 

fiduciary duties. 

7. Now that the Debtors have agreed to the amount of consideration to be paid to the 

holders of Fire Victim Claims, the central question left to answer in these chapter 11 cases is which 

plan is in the best interests of the Debtors’ estates and creditors, delivers the financing necessary for 

the Debtors to pay their obligations and to fund critical infrastructure improvements on a goingforward basis and implements the fundamental, top-down organizational change required by A.B. 

1054. The answer is clear that only the TCC/AHC Plan accomplishes this. The Court should, 

therefore, require that the settlement contained in the Debtor/TCC RSA be available to the estates and 

all of their constituents so that these cases may move forward to conclusion prior to June 30, 2020. 

The Court should not approve the provisions of the Debtor/TCC RSA that would unduly prejudice the 

competing plan process and jeopardize the TCC/AHC Plan to the detriment of the Debtors’ estates and 

creditors. 

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CONCLUSION 

8. For the foregoing reasons, the Ad Hoc Committee respectfully requests that the Court 

deny the Motion unless the modifications requested herein are made and grant such other relief as the 

Court deems appropriate. 

Dated: December 16, 2019 AKIN GUMP STRAUSS HAUER & FELD LLP 

By: /s/ Ashley Vinson Crawford____ 

Ashley Vinson Crawford (SBN 257246) 

Michael S. Stamer (pro hac vice) 

Ira S. Dizengoff (pro hac vice) 

David H. Botter (pro hac vice) 

Abid Qureshi (pro hac vice) 

Counsel to the Ad Hoc Committee of Senior Unsecured 

Noteholders of Pacific Gas and Electric Company 

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Exhibit A 

December 13, 2019 Letter from Office of the Governor 

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