December 6, 2019 – The Debtors announced that they have reached a $13.5bn settlement with the Official Committee of Tort Claimants (the "TCC") and with representatives of individuals with claims resulting from the 2015 Butte Fire, 2017 Northern California Wildfires and 2018 Camp Fire (the "Wildfire Claims"). For the Debtors, this is their third critical settlement, having earlier agreed a $1.0 billion settlement with public entities and an $11.0bn settlement with exposed insurance companies (the "Subrogation Claims"). The settlement with the TCC, which had together with a group of the Debtors' noteholders (the “Ad Hoc Committee") otherwise filed a competing Chapter 11 Plan on October 17th, should pave the way for the Debtors' to file a confirmable version of their own Plan in the near term.
On September 9th, the Debtors filed a first iteration of their Plan insisting on an absolute cap on wildfire liability of $17.9bn, comprised of $8.4bn for Wildfire Claims and $8.5bn for Subrogation Claims and that "the Plan will not become effective" if those redlines were crossed. The first of those redlines was in fact crossed only days later when the Debtors agreed to a settlement that increased payouts as to Subrogation Claims from $8.5bn to $11.0bn. The Debtors' present abandonment of the $8.4bn redline as to Wildfire Claims comes after a number of Court reversals, including the Court's decision to allow the competing TCC/Ad Hoc Group Plan valued at $24.0bn and subsequently increased to $25.5bn, equal to the aggregate amount now offered by the Debtors in the three settlements.
The Debtors' press release stated: "PG&E Corporation and Pacific Gas and Electric Company (together, ‘PG&E’) have agreed to a settlement with the Official Committee of Tort Claimants (TCC) and with firms representing individual claimants who sustained losses from the 2015 Butte Fire, 2017 Northern California Wildfires and 2018 Camp Fire. The settlement agreement is valued at approximately $13.5 billion and has the support of the TCC. The settlement will resolve all claims arising from those fires, including the 2017 Tubbs Fire as well as all claims arising from the 2016 Ghost Ship Fire in Oakland.
With all major wildfire claims now on a path to be resolved and the total amount of wildfire liabilities determined, PG&E will now amend and finalize its Plan, which will satisfy all wildfire claims in accordance with Assembly Bill 1054 (AB 1054) and otherwise comply with all requirements of the Bankruptcy Code. The company remains on track to obtain regulatory approval and Bankruptcy Court confirmation of its Plan in advance of the June 30, 2020, statutory deadline set by AB 1054 for participation in the state’s go-forward wildfire fund."
Further Background
On October 17, 2019, following an October 9th Court decision to terminate the Debtors' Plan filing and solicitation exclusivity as it applied to the TCC/Ad Hoc Group Plan, those parties filed a competing Chapter 11 Plan [Docket No. 4257]. The TCC/Af Hoc Group argued that their Plan provided for a more comprehensive settlement of all wildfire claims against the Debtors, including subrogation claims, now valued at $25.5bn, paid with a mix of cash and equity of the Reorganized PG&E Corp., which both the TCC and the Ad Hoc Committee insisted had the best chance to fully and fairly compensate wildfire victims. In addition to its more comprehensive reach, the TCC and the Ad Hoc Committee argued that their financing was superior to that proposed by the Debtors, in that payments to victims under the Wildfire Claims Settlement and Alternative Plan will be satisfied from, among other sources, fully committed financing provided by the members of the Ad Hoc Committee—in contrast to what they viewed as "the highly conditional and illusory ‘financing’ that the Debtors hope will materialize to back the Placeholder Plan."
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