SAN FRANCISCO (CN) – Government agencies and other objectors on Friday blasted Pacific Gas and Electric’s request to estimate all uninsured wildfire claims at $13.5 billion as an underhanded attempt to force the settlement amount on fire victims even if its bankruptcy plan fails.
The Paradise Irrigation District, Paradise Unified School District, Northern Recycling and Waste Services LLC and Napa County Recycling & Waste Services LLC filed an objection Friday urging U.S. District Judge James Donato to reject PG&E’s estimation request.
“The Debtors seek some sort of comfort ruling from this Court justifying their plan compromise, which they may turn around and use to argue a reverse-engineered compliance with AB 1054 or to prejudice dissenting fire victims in plan confirmation matters before the bankruptcy court,” the objecting claimants wrote in a 19-page brief.
Donato was overseeing the process of estimating PG&E’s liability for 22 wildfires allegedly sparked by its equipment before a $13.5 billion settlement was reached in December.
The objectors say a $13.5 billion estimate would not comply with provisions of California’s Assembly Bill 1054, which requires PG&E satisfy all wildfire claims and exit bankruptcy by June 30 in order to access a multibillion insurance fund to cushion it from future wildfire liabilities.
That’s partly because those administering the $13.5 billion trust can reduce large claims to increase the amount available to other claimants. The objectors say that fact alone means the settlement amount is not a fair estimate of all claims.
Another basis for the objection is that no proof was offered to support the $13.5 billion figure, which is far less than the $35 billion lawyers for fire victims had demanded before a settlement was reached.
“Debtors have submitted no evidence explaining what if any analysis was used to get to the $13.5 billion number,” the objectors stated in their filing.
Attorneys for California and federal government agencies also filed responses to PG&E’s request, stating that they will oppose the $13.5 billion estimate unless the company’s bankruptcy plan is approved.
If the bankruptcy plan fell apart and the settlement was not approved, the Federal Emergency Management Agency would revive its $4 billion claim for emergency response costs related to the wildfires. FEMA agreed to settle its claim for $1 billion, which would only be collected after all wildfire victims’ claims are paid in full.
Ballots are currently being sent out to some 80,000 fire victims who will vote on whether to approve or reject PG&E’s bankruptcy plan, which includes $25.5 billion in settlements for individual fire victims, insurance claims and local government agencies. A majority no vote would put the plan in jeopardy, but a bankruptcy judge could still approve the plan.
On Thursday, the Tort Claimants Committee, which represents fire victims, also objected to PG&E’s estimation motion. Because half the settlement trust will be funded by PG&E stock, fire victims want the court to clarify that the actual value of the stock must be $6.75 billion.
“The debtors’ current plan provides PG&E stock that does not have a guaranteed value of $6.75 billion in the current coronavirus market collapse,” fire victims’ lawyer Robert Julian wrote in a 16-page brief.
The fire victims also complain that PG&E has yet to clarify when the fire victims’ trust will be allowed to liquidate stock, an issue currently under negotiation between the parties. Those terms will directly affect the trust’s ability to maximize the value of the stock.
“The TCC has requested that the Debtors agree in writing that the stock of other stockholders cannot be liquidated prior to the Fire Victim Trust so as to undercut the Fire Victim Trust’s stock value, impairing the Fire Victims’ ability to receive the promised $6.75 billion of stock value,” Julian wrote.
The fire victims further object to PG&E’s request to amend its plan so it won’t pay out cash and stock for the trust until Dec. 31, 2020. Fire victims say their settlement requires PG&E to make the cash and stock available by Aug. 29.
“Cash funded at a later date does not hold the same value as cash funded at the promised, earlier date,” Julian wrote. “The recipients are Fire Victims, many of whom live paycheck to paycheck, are struggling under the events of the corona virus pandemic, and simply want to recover their losses (fire losses, not investment losses) as soon as possible.”
On Monday, the committee asked a bankruptcy judge to send a supplemental notice to fire victims urging them not to vote on PG&E’s bankruptcy plan until after May 1. The committee said it intends to send out another supplemental notice by then “explaining whether and how PG&E has fixed these problems.”
Adventist Health, which claims over $1 billion in damages for a hospital in the town of Paradise that was destroyed in the Camp Fire, also filed an objection to PG&E’s estimation motion Friday.
“Where no proof is offered by the Debtors as to the amount of the Fire Victim Claims, and what little evidence that is available in the public record demonstrates that the $13.5 billion is not sufficient to fully compensate the Fire Victim Claims, then this Court should not adopt the $13.5 billion amount,” Adventist Health attorney Rebecca Winthrop wrote in a 9-page opposition brief.
P&GE spokeswoman Ari Vanrenen said the company was still reviewing the court filings and could not comment on them. However, she stressed that the company considers the safety of customers and communities it serves its “most important responsibility.”
“Since PG&E entered Chapter 11, the company has had one goal, and that is to get victims paid fairly and timely,” Vanrenen said. “PG&E is on path to get its plan of reorganization approved by the bankruptcy court by the June 30, 2020 deadline to participate in the state’s new Go-Forward Wildfire Fund, and to fund the Fire Victim Trust as soon as possible thereafter.”