Lawyer Questions Fairness of Voting on PG&E Bankruptcy Plan

Pacific Gas & Electric vehicles are parked at the PG&E service center in Oakland, Calif. (AP Photo/Ben Margot, File)

SAN FRANCISCO (CN) — A lawyer for wildfire victims on Monday accused other law firms of placing their thumb on the scale in favor of PG&E’s preferred bankruptcy plan and making it harder for fire survivors to vote against the plan.

Citing screenshots of messages from law firms and complaints by fire victims on social media, attorney Thomas Tosdal noted at least one law firm tells clients it will automatically vote “yes” for them while other firms make it easy to vote yes but require extra steps to vote no.

Tosdal, an attorney representing 1,021 fire victims, raised concerns about the alleged voting improprieties in a statement filed Monday in the wildfire claims estimation case overseen by U.S. District Judge James Donato.

“They are chilling on people who want to vote to reject,” Tosdal said in a phone interview of the alleged improprieties. “It makes them work an extra level and tells the voter that a reject vote is disfavored.”

For PG&E to advance its favored bankruptcy plan without extra obstacles, two-thirds of some 80,000 fire survivors must vote “yes” on its plan. The voting process started at the beginning of April when court-approved information packets and ballots were mailed to fire victims. Voting will continue through May 15.

However, some fire victims and attorneys have raised concerns about a $13.5 billion settlement for all individual wildfire claims. Half of the money will be funded by liquidated PG&E stock, the value of which could be lower than the promised $6.75 billion due to current market turmoil related to the Covid-19 pandemic.

Eric Lowrey, a certified restructuring and insolvency advisor, filed a statement in Donato’s court on April 4 predicting the actual value of the stock will be closer to $4.85 billion.

“This value is still at significant risk of further decline in the wake of the Covid-19 pandemic as utility companies face the potential to underperform forecasts in the near-term and other potential financial challenges,” Lowrey wrote in his 10-page statement.

Meanwhile, Tosdal claims law firms that support the deal are erecting barriers to make it harder for their clients to cast “no” votes against the plan.

In one example, Tosdal cites what appears to be an email from the Dallas, Texas-based firm Baron & Budd. The communication states, in part: “We plan on voting yes to allow PG&E to get out of bankruptcy. If you do not agree with this vote, contact us.”

Baron & Budd did not respond to an email and phone call requesting comment Monday.

Another fire victim posted a social media comment stating that the Frantz Law Group sent two text messages “asking if they could cast my vote for me. When I responded ‘No’ a text came back that they didn’t recognize my answer.”

Responding to the complaint, Frantz Law Group attorney Regina Bagdasarian explained the text message for soliciting votes from wildfire claimants is not set up to receive replies. Bagdasarian provided a screen shot of the text message, which includes “yes” and “no” buttons for capturing votes. If a client wants to cast their own ballot, they can choose not to respond to the text message.

Because the electronic ballot system is not set up to receive votes via smartphone and some wildfire claimants don’t have access to computers, Bagdasarian said her firm is using text messages to make it easier for clients to vote.

“It’s very important for us to honor the integrity of our clients’ votes,” Bagdasarian said. “We are trying to help facilitate the vote.”

Despite that clarification, Tosdal insists that some law firms are still requiring fire victims to use different methods to cast “no” votes.

Tosdal said he believes these improprieties tip the scale in favor of PG&E’s preferred plan and weaken a sense of integrity for the process.

“Procedural devices that make it harder for fire victims to vote to reject the plan cross the line and undermine confidence in the vote,” Tosdal wrote in his 3-page filing.

The Solona Beach, California-based lawyer is asking Judge Donato to intervene and direct lawyers to “put voting for or against the plan on equal footing and not encumber in any way a fire victim’s right to vote to reject the plan.”

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. Donato has no direct control over the voting process, which is overseen by the bankruptcy court.

Tosdal said he raised the issue with Donato because the district court judge had asked how fire victims were voting at an April 16 status conference. Tosdal said he also believes U.S. Bankruptcy Judge Dennis Montali “has his hands full.”

A PG&E spokesperson declined to say if the company is concerned the voting process has been tainted based on new evidence submitted Monday, but the company offered a general statement about the vote.

“Voting by claimants is underway with a deadline to respond by May 15. We encourage everyone to vote. We continue to work diligently to obtain approval for our Plan of Reorganization by the Bankruptcy Court as soon as possible, so victims will be paid fairly and quickly,” PG&E spokesperson Lynsey Paulo said.

PG&E has asked Donato to estimate wildfire claims at $13.5 billion at a hearing scheduled for May 21. The motion is opposed by some wildfire claimants.

A hearing on confirmation of PG&E’s bankruptcy plan is scheduled for May 27 in San Francisco.

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