PG&E plan exclusivity termination requests denied by bankruptcy court

By Caroline Salls

Pittsburgh, Aug. 16 – An informal group of PG&E Corp. and Pacific Gas and Electric Co. subrogation claim holders’ and an informal committee of senior unsecured noteholders’ motions for termination of the PG&E debtors’ exclusive plan periods were denied Friday by the U.S. Bankruptcy Court for the Northern District of California.

As previously reported, the claimants submitted a proposal outlining the key terms of a potential plan of reorganization for the PG&E Chapter 11 cases.

The group, which holds more than $20 billion in unsecured claims arising from the billions of dollars in insurance claims paid to California wildfire victims, said its plan would provide a viable path toward confirmation and emergence for the PG&E debtors.

The group said its proposal presents the best opportunity to successfully resolve the Chapter 11 cases by the June 2020 deadline for participating in the insurance wildfire fund and expedite distributions to wildfire victims.

The group’s motion asked the court to terminate PG&E’s exclusive periods for filing and soliciting votes on a Chapter 11 plan so the claimants may file their proposed plan.

The unsecured noteholders said in their termination motion that they also intended to file a competing plan if PG&E’s exclusivity was terminated.

Under its proposed plan, the committee said it would be willing to fund reorganized PG&E with fresh equity, which will restore strong investment-grade credit metrics so the company can once again access low-cost capital going forward for all of its long-term infrastructure investments.

Specifically, the committee said its plan calls for the noteholders to provide an up to $30 billion new-money investment, the vast majority of which would come in the form of equity.

The noteholders said $16 billion, or $2 billion more under specified circumstances, of this investment would be used to compensate all holders of pre-bankruptcy wildfire claims against PG&E. The plan calls for PG&E to contribute $4 billion to establish a broad-based utility wildfire fund.

PG&E announced on Aug. 12 that it intends to file a plan by Sept. 9 that will allow it to emerge from bankruptcy by the June 2020 deadline set in new legislation.

In Friday’s order, judge Dennis Montali said “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 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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