Tug-of-war begins over claims against PG&E

Wildfire victims’ attorneys urge judge to prioritize their liability cases

SAN FRANCISCO » PG& E fire victims repeatedly implored a judge on Thursday to remember people who were killed or harmed as a result of a series of catastrophic and lethal infernos that scorched Northern California in recent years, as the embattled utility’s bankruptcy case trudges ahead.

“There are thousands living in trailers,” Frank Pitre, an attorney for fire victims who have sued the utility, told the U. S. Bankruptcy Court during a hearing in San Francisco. “This process should move with a sense of urgency.”

In a request that has rankled attorneys for fire victims, PG& E wants to pay $130 million in bonuses to 14,000 employees to reward them for what the company deems to be their good performance during 2018 — the same year the Camp Fire roared through Butte County and essen-

tially destroyed the town of Paradise and killed 86 people. PG&E reported that it suffered equipment failures near the point of origin of the fire the morning of Nov. 8, but the cause of the blaze is still under investigation.

U. S. Bankruptcy Court Judge Dennis Montali decided to take the bonuses matter and other issues up during a hearing scheduled for late February.

The judge approved PG&E’s request to seek $1.5 billion in interim financing so it can proceed with normal operations and continue to keep the lights on and the heat flowing.

San Francisco- based PG&E filed for a Chapter 11 bankruptcy on Jan. 29, listing $51.69 billion in debts and $71.39 billion in assets. And Thursday’s hearing made it clear that a tugof-war has begun involving an array of groups that are pressing to have their claims paid when PG&E emerges from the bankruptcy proceeding, which the utility hopes will allow it to reorganize its shattered finances. PG&E claims that a mountain of liabilities linked to the wildfires of 2017 and 2018 has forced it into insolvency.

Interspersed among demands from attorneys for fire victims, representatives for bondholders reminded the court that PG&E owes their clients billions of dollars that aren’t secured by any collateral.

Also appearing were representatives of the state Public Utilities Commission, big banks and lenders, clean power organizations, providers of goods and services to PG&E, the state Attorney General’s Office, and the International Brotherhood of Electrical Workers.

“People should not be getting bonuses ahead of people victimized by the fire,” said Dario De Ghetaldi, an attorney for victims of a PG&E-caused fire in Amador County and Calaveras County in 2015.

PG&E attorney Stephen Karotkin told the court that top PG&E executives, members of the board of directors and former PG&E CEO Geisha Williams would not receive any of the $130 million in bonus money.

The utility also hopes to use the bankruptcy case to establish a trust fund to resolve all lawsuits from fire victims, Karotkin said during the hearing. However, lawsuit plaintiffs often receive far less through a bankruptcy court settlement than they would through a state court process.

“The harm caused by these fires goes far beyond any trading of money,” said Thomas Tosdal, an attorney who represents fire victims, including those who suffered harm due to the Camp Fire. “The fire victims should be put as far upfront in priority as the law allows.”

In a bankruptcy case, secured creditors have priority over unsecured creditors.

PG&E is hardly a stranger to federal court appearances. The company filed for bankruptcy in 2001, a case that took three years to conclude and led to higher utility bills for customers.

In 2016, a federal jury found PG& E guilty for crimes it committed before and after a 2010 gas explosion caused by PG&E that killed eight people and destroyed a San Bruno neighborhood. This week, the federal judge handling the San Bruno trial aftermath stated that PG&E, which now is a convicted felon, has violated its probation in the case. The violation involved the judge saying PG&E did not adequately notify its probation monitor that the Butte County District Attorney’s office was investigating criminal actions by the utility involving fires during 2017.

Pitre reminded the court of the dire circumstances of the fire victims of recent years.

“People are going to be homeless,” he said, “they are living in trailers, they are looking for food in garbage cans.”