Foothills Fires

Numerous fires race through Sonoma County in October 2017.

Less than one week after U.S. Bankruptcy Judge Dennis Montali confirmed Pacific Gas & Electric's plan of reorganization, two wildfire victims say they are "dismayed by the treatment" they have experienced as they start through the fire victim compensation process.

"My wife and I are sort of [the first] fire victims going through this trust process," Tubbs Fire victim Eric Carlson told Montali in a court hearing on June 24. "If this is a bellwether for how this process is going to go, which I hope it isn't, I really do hope this goes swimmingly well . . . but to this point, that has not been the case."

Carlson and his wife said they have spent the past 2.5 years cleaning up immediate hazards on their property and will need many more years to recover from the devastation wrought by the fire [8074]. The couple made multiple efforts to resolve their concerns informally at various stages of the bankruptcy case, but were ignored, according to their filing.

In large bankruptcy cases, it is routine for creditors to wait years—sometimes decades—to receive payment on their claims, despite the best efforts of all involved, the tort claimants committee, which represents 70 percent of wildfire victims, said in response to Carlson and others in the filing [8074]. The goal of the victim trust is to fairly compensate all fire victims in an equitable manner, the TCC said in the filing.

Victims will now begin to funnel into the victim trust process and find out how much they will receive and when their claims will be paid. PG&E must provide about $5.4 billion in cash to the fire victim trust and transfer $6.75 billion in its common stock to the fund, after its confirmed reorganization plan goes into effect. If the plan does not go into effect on or before Dec. 31, the plan will be considered null and void in all respects, according to PG&E's representatives [8048].

In another ongoing dispute, wildfire victim lawyer Bonnie Kane continued to express concerns to Montali about the bankruptcy's voting process, which Kane said did not provide victims with an adequate chance to vote on the plan.

"It is a serious matter to deprive the wildfire victims [of] the right to vote," Kane said in a June 19 filing [8034]. "The wildfire victims do not want to be told, and they should not be told, that they have also lost their right as members of an impaired class."

Kane said that a victim lawyer on May 6 received three ballots and solicitation packages out of 27 requested, but the ballots and packages were ordered to have been mailed 36 days before. Kane said a substantial portion of victims received their solicitation packets and ballots less than a week before the May 15 voting deadline, and others received their packets after the deadline.

Furthermore, 9,900 fire victim votes were not counted by Prime Clerk, the administrator of PG&E's bankruptcy plan voting process, according to victim lawyer Richard Lapping [7935]. Prime Clerk Director Josh Karotkin is the son of PG&E's lead bankruptcy lawyer, Stephen Karotkin. Some victims and lawyers in the case have argued that this father-son relationship created a conflict of interest (see CEM No. 1595).

The TCC investigated the irregular voting process and said it "did not identify any evidence of a significant voting issue" [8022]. Even if all of the measurable defective and potentially duplicative ballots were presumed to be cast against PG&E's plan, an assumption that is not supported by any data or facts reviewed in connection with its investigation, the TCC said it believes the two-thirds threshold required for approval by the fire victim class would have been met.

Kane said the TCC had missed the point, and that victims have a right to vote regardless of the influence of their votes.

Separately, PG&E on June 22 started public offerings of its common stock and its equity units process. PG&E is hoping for $4 billion and approximately $1.23 billion of gross proceeds in order to fund its emergence from Chapter 11 bankruptcy, according to a news release. The offerings are currently expected to price during the week commencing June 22 and are expected to close on or about July 1, subject to market conditions and the satisfaction of customary closing conditions, PG&E representatives said in the release. If the offerings are successfully consummated, PG&E Corp. currently anticipates emerging from Chapter 11 bankruptcy on or about July 1, the release says.

Staff Writer

David Krause is an energy reporter covering the California Energy Commission and Air Resources Board. He writes about transportation, climate change, utilities, and wildfires. He has an MFA in Writing, an MA in English, and a BS in Civil Engineering.