PG&E: Committee’s request to encourage plan vote withholding denied

By Caroline Salls

Pittsburgh, April 8 – PG&E Corp.’s official committee of tort claimants’ motion to send a letter to wildfire victims asking them to hold off on voting on the company’s plan of reorganization was denied Tuesday by the U.S. Bankruptcy Court for the Northern District of California.

“What the TCC wants is for the court to permit it to advise members of [the fire victims class], impaired under the pending debtors’ plan, to withhold their votes at least until the end of the month, by which time the TCC hopes and believes there will be further developments in the plan negotiation process to inform the class members more fully,” the order said.

“Apart from the logistical and practical problems presented by the time pressures presented in this case by the looming June 30, 2020, deadline of AB 1054, and the tragic worldwide pandemic brought about by Covid-19, what the TCC seeks is not appropriate.”

Judge Dennis Montali said in his order that the court has already approved PG&E’s disclosure statement and virtually all of the issues raised by the committee in the motion were well-known at the time of the final hearing on the disclosure statement.

Specifically, Montali said the issues that were known when the disclosure statement order was entered included the fact that an anticipated rights offering had not yet been finalized then and that there were changes in the expected equity/debt structure of the reorganized companies that differed from what had been described in a restructuring support agreement negotiated between the PG&E debtors and the committee.

The judge said the committee is also complaining about a formula in the support agreement for calculating the value of the reorganized companies and wants PG&E to “guarantee that the stock issued to the fire victim trust will be ‘funded with $6.75 billion in cash and PG&E stock valued at $6.75 billion,’” but those problems could have been flagged for insertion in the disclosure statement previously.

“Hundreds, if not thousands, of members of the class have already voted,” the order said. “The TCC apparently does not want to upset those votes, but it is beyond doubt that confusion will reign if the court permits the proposed letter to go out, leaving countless fire victims confused even more than they might be now.

“The court is satisfied that agreeing to the TCC’s request will cause more harm than good, and court-approval of its proposal is ill-advised and must be rejected.”

Montali said parties are free to attempt to persuade voters to vote for or against a plan once a disclosure statement has been approved, but that is not the same as asking the court to approve a plea to delay a vote while future events unfold.

“If the TCC chooses to proceed, it does so without this court’s approval or disapproval,” the order said.

The electric and natural gas utility is based in San Francisco. The company filed bankruptcy on Jan. 29, 2019 under Chapter 11 case number 19-30088.

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