Relevant Documents:Hearing AgendaRevised Proposed Final DIP Order
Judge Dennis Montali today approved the PG&E debtors’ $5.5 billion DIP financing on a final basis after a
revised proposed order was agreed upon by the California Public Utilities Commission and after the court overruled the remaining objection of the official committee of tort claimants. The changes reflected in the revised DIP order, partially as discussed during the
March 13 hearing, included: (i) after an event of default under the DIP, the DIP lenders are required to provide seven business days’ written notice before pursuing certain remedies; (ii) after an event of default under the DIP specifically as a result of the appointment of a chapter 11 trustee, the DIP lenders are required to provide 21 business days’ written notice before pursuing certain remedies; and (iii) prior to the exercise of remedies by the DIP lenders that would result in the transfer of any utility asset that is part of the DIP collateral, the debtors would need to seek and obtain CPUC approval to execute such transfer, and no such transfer will occur prior to 21 business days after the delivery of an applicable remedies notice.
Before today’s hearing, the debtors and case parties consensually resolved the trading procedures/NOLs motion, which the court approved without comment.
Today, Judge Montali also approved the debtors’
motion seeking authority to perform under a prepetition settlement with the Butte County District Attorney’s Office requiring the company to establish and fund an enhanced fire prevention and communications program. Under the settlement, the company has $1 million of $1.5 million in funding outstanding under an agreed installment payment timeline.
The Singleton Law Firm, or SLF, fire victim claimants
opposed the debtors’ continued performance on the Butte County DA settlement to the extent that approval of such motion was not conditioned on the immediate payment of the 52 fire victims “whose claims were settled by PG&E prior to the petition date but whom PG&E failed to pay.”
In approving the motion, Judge Montali did not accept such condition.However, counsel for the SLF fire victims indicated that they would “start on a motion” seeking to require the debtors to pay those 52 victims under their prepetition settlements. That comment was followed up by Matthew Feldman of Willkie Farr, counsel to the ad hoc group of subrogation claimholders, who urged the debtors to move to address fire victim claims that were settled prepetition and to honor such prepetition executed settlement agreements. Feldman added that although it cannot be certain that this is a “solvent company case,” that is what the court and the parties have heard to date and thus, the debtors should “put something together” for those fire victim claims that were settled prepetition.
Judge Montali cautioned that such a proposed payment of a subset of unsecured creditors during the case could result in
“creeping confirmation issues” and noted that if any such payment is proposed, he would also have to see what the unsecured creditors committee and the greater creditor body would have to say.
Counsel to the debtors did not respond to the comments on this issue made by counsel to the SLF fire victims, counsel to the ad hoc group of subrogation claimholders or Judge Montali.
Finally, Judge Montali also addressed the debtors’ requested preliminary
injunction seeking to prohibit the prosecution and continuation of 22 pending civil actions against nondebtor co-defendants. Prior to today’s hearing, the debtors reached stipulations with respect to four of those actions and are continuing discussions with securities class-action plaintiffs. Today, the judge entered default preliminary injunction orders with respect to 14 of the actions, as the relevant plaintiffs did not respond to the debtors’ motion. With respect to the three other civil actions, as discussed during today’s hearing, the debtors’ requested injunction would be entered and/or resolutions were reached on the record.
The next scheduled bankruptcy court hearing is April 9 at 12:30 p.m. ET.