UNITED STATESSECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report: March 17, 2020(Date of earliest event reported)

 

Commission File Number  Exact Name of Registrantas specified in its charter  

State or Other Jurisdiction ofIncorporation or Organization  

IRS Employer IdentificationNumber

001-12609    PG&E CORPORATION    California    94-3234914 

001-02348   PACIFIC GAS AND ELECTRICCOMPANY    California    94-0742640 

       77 BEALE STREET   77 BEALE STREET

P.O. BOX 770000   P.O. BOX 770000 SAN FRANCISCO, California 94177   SAN FRANCISCO, California 94177

(Address of principal executive offices) (Zip Code)   (Address of principal executive offices) (Zip Code)(415) 973-1000   (415) 973-7000

(Registrant’s telephone number, including area code)   (Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the followingprovisions (see General Instruction A.2. below):

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class Trading Symbol(s)Name of each exchange

on which registeredCommon Stock, no par value  PCG  The New York Stock Exchange First preferred stock, cumulative, par value $25 per share, 5% series A redeemable  PCG-PE  NYSE American LLC First preferred stock, cumulative, par value $25 per share, 5% redeemable  PCG-PD  NYSE American LLC First preferred stock, cumulative, par value $25 per share, 4.80% redeemable  PCG-PG  NYSE American LLC First preferred stock, cumulative, par value $25 per share, 4.50% redeemable  PCG-PH  NYSE American LLC First preferred stock, cumulative, par value $25 per share, 4.36% series A redeemable  PCG-PI  NYSE American LLC First preferred stock, cumulative, par value $25 per share, 6% nonredeemable  PCG-PA NYSE American LLC First preferred stock, cumulative, par value $25 per share, 5.50% nonredeemable  PCG-PB  NYSE American LLC First preferred stock, cumulative, par value $25 per share, 5% nonredeemable  PCG-PC  NYSE American LLC 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) orRule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company PG&E Corporation ☐

Emerging growth companyPacific Gas and ElectricCompany ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new orrevised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

PG&E Corporation ☐Pacific Gas and Electric Company ☐

Item 1.01 Entry into a Material Definitive Agreement.

As previously disclosed, on January 29, 2019, PG&E Corporation (the “Corporation”) and Pacific Gas and Electric Company (the “Utility,” and togetherwith the Corporation, the “Debtors”) filed voluntary petitions for relief under chapter 11 of title 11 (“Chapter 11”) of the United States Code in the U.S.Bankruptcy Court for the Northern District of California (the “Bankruptcy Court”).  The Debtors’ Chapter 11 cases are being jointly administered under the captionIn re: PG&E Corporation and Pacific Gas and Electric Company, Case No. 19-30088 (DM) (the “Chapter 11 Cases”).  On March 16, 2020, the Debtors, certainfunds and accounts managed or advised by Abrams Capital Management, L.P. (“Abrams”), and certain funds and accounts managed or advised by KnightheadCapital Management, LLC (“Knighthead” and, together with Abrams, the “Shareholder Proponents”) filed the Debtors’ and Shareholder Proponents’ Joint Chapter11 Plan of Reorganization dated March 16, 2020 with the Bankruptcy Court (as may be amended, modified or supplemented from time to time, the “Plan”).

2018 Camp Fire Criminal Investigations

On March 17, 2020, the Utility entered into a Plea Agreement and Settlement (the “Agreement”) with the People of the State of California, by andthrough the Butte County District Attorney’s office (the “People” and the “Butte DA,” respectively) to resolve the criminal prosecution of the Utility in connectionwith the 2018 Camp fire.  Subject to the terms and conditions of the Agreement, the Utility has agreed to plead guilty to 84 counts of involuntary manslaughter inviolation of Cal. Penal Code § 192(b) and one count of unlawfully causing a fire in violation of Cal. Penal Code § 452, and to admit special allegations pursuant toCal. Penal Code §§ 452.1(a)(2), 452.1(a)(3) and 452.1(a)(4).  Upon approval and acceptance of the Agreement by the Butte County Superior Court and theBankruptcy Court, the People have agreed not to prosecute any other criminal charges related to or arising out of the 2018 Camp fire against the Utility, PG&ECorporation or any of their subsidiaries, including PG&E Corporation and the Utility as reorganized pursuant to the Chapter 11 Cases.

Pursuant to the Agreement, the Utility will be sentenced to pay the maximum total fine and penalty of approximately $3.5 million.  The Agreementprovides that no other or additional sentence will be imposed on the Utility in the criminal action in connection with the 2018 Camp fire.  The Utility has alsoagreed to pay $500,000 to the Butte County District Attorney Environmental and Consumer Protection Fund to reimburse costs spent on the investigation of the2018 Camp fire.

As a result of the criminal plea, certain Camp fire victims may have rights to restitution pursuant to Cal. Penal Code § 1202.4.  The Plan classifies claimsfor restitution as either “HoldCo Fire Victim Claims” or “Utility Fire Victim Claims” which are to be satisfied from the “Fire Victim Trust” to be established underthe Plan.  Pursuant to the Agreement, the People have agreed not to oppose any effort by the Utility to seek the discharge of claims for restitution pursuant to Cal.Penal Code § 1202.4 in the Chapter 11 Cases made on the grounds that such claims are satisfied pursuant to the Utility’s existing settlement agreements withindividuals and public entities holding wildfire-related claims and the Plan.  The Agreement also provides for the full and final satisfaction, release, and dischargeof proofs of claim filed by the People in the Chapter 11 Cases.

Pursuant to the Agreement, the Utility may withdraw the plea if, among other things, (a) the Agreement is not approved by the Butte County SuperiorCourt, or (b) the Agreement is not approved by the Bankruptcy Court or the Plan is not confirmed by the Bankruptcy Court on or before June 30, 2020 or does notbecome effective in accordance with the terms thereof.  If the plea is withdrawn by the Utility, the indictment referenced in the Agreement shall remain.

Simultaneous with entry into the Agreement, but separate from such Agreement, the Utility has committed to spend up to $15 million over five years toprovide water to Butte County residents impacted by damage to the Utility’s Miocene Canal caused by the 2018 Camp fire.  In addition, the Utility has separatelyconsented to the Butte DA consulting, sharing information with and receiving information from the monitor overseeing the Utility’s probation related to the SanBruno explosion through the expiration of the Utility’s term of probation, and in no event until later than January 31, 2022. This consent is subject to the approvalof the federal court overseeing the Utility’s probation and the monitor.

The foregoing description of the Agreement does not purport to be complete and is qualified in its entirety by reference to the Agreement, which is filedas Exhibit 10.1 hereto and incorporated herein by reference.

Item 8.01 Other Events.

Case Resolution Contingency Process

As previously disclosed, in response to the concerns raised by California Governor Gavin Newsom (the “Governor”), the Debtors have committed to anumber of changes in connection with the Plan regarding governance, operations and financial structure, together designed to prioritize safety and expedite theDebtors’ successful emergence from Chapter 11.  On March 20, 2020, the Debtors filed a motion (the “Motion”) with the Bankruptcy Court for entry of an orderapproving a case resolution contingency process to address the circumstance in which the Plan is not confirmed or fails to go effective in accordance with certainrequired dates (the “Case Resolution Contingency Process”).  As further described in the Motion, the Case Resolution Contingency Process contemplates a processfor the sale of PG&E Corporation or the Utility in the event that the Plan is not confirmed or fails to go effective in accordance with certain required dates,including the appointment of a Chief Transition Officer to manage such process.  The Case Resolution Contingency Process also contemplates an operationalobserver selected by the state of California.

In addition, the Motion sets forth certain other commitments by the Debtors in connection with the confirmation process and implementation of the Plan,including among other things, limitations on the ability of PG&E Corporation to pay dividends; commitments by the Utility with respect to cost recovery ofamounts paid in respect of “Fire Claims” under the Plan; the terms of a purchase option in favor of the state of California (which would be exercisable only inlimited circumstances); and commitments with respect to the Utility’s utilization of wildfire-related net operating losses.

The Motion is attached as Exhibit 99.1 hereto and incorporated herein by reference.

Also on March 20, 2020, the Governor filed a responsive pleading in the Bankruptcy Court stating that, assuming the Bankruptcy Court grants the Motionand the California Public Utilities Commission (“CPUC”) approves the Plan with the governance, financial and operational provisions submitted to the CPUC bythe Utility or otherwise agreed by the Utility, with any modifications the CPUC believes appropriate or necessary, the Plan “will, in the Governor’s judgment, becompliant with AB 1054.”  The Governor’s pleading also states that “a rate neutral securitization pursuant to Senate Bill 901 …would, in [the Governor’s]judgment, be in the public interest….”  A hearing in the Bankruptcy Court to consider approval of the Motion is currently scheduled for April 7, 2020.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits ExhibitNumber   Description

10.1   Plea Agreement and Settlement, dated March 17, 202099.1    Motion for Entry of an Order Approving Case Resolution Contingency Process, filed with the Bankruptcy Court on March 20, 2020104    Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrants have duly caused this report to be signed on their behalf by the undersignedthereunto duly authorized.

   PG&E CORPORATION         Date: March 23, 2020 By: /s/ JANET C. LODUCA      Name:  Janet C. Loduca       Title:  Senior Vice President and General Counsel         

   PACIFIC GAS AND ELECTRIC COMPANY         Date: March 23, 2020 By: /s/ BRIAN M. WONG      Name:  Brian M. Wong       Title:  Vice President, Deputy General Counsel, and

Corporate Secretary  

       

Exhibit 10.1 

MICHAEL L. RAMSEY, District Attorney (State Bar No. 79166)MARC NOEL, Supervising Deputy District Attorney (State Bar No.142558)JENNIFER DUPRE-TOKOS, Deputy District Attorney (State Bar No.191480)Butte County District Attorney’s Office25 County Center Dr. #245 Oroville, CA 95965Telephone:  (530) 538-7411  Attorneys for the People 

  BRAD D. BRIAN (State Bar No. 79001)MICHAEL R. DOYEN (State Bar No. 119687)LISA J. DEMSKY (State Bar No. 186006)MUNGER, TOLLES & OLSON LLP350 South Grand AvenueFiftieth FloorLos Angeles, California 90071-3426Telephone:  (213) 683-9100

KATE DYER (State Bar No. 171891)CLARENCE, DYER & COHEN LLP899 Ellis StreetSan Francisco, California 94109-7807Telephone:  (415) 749-1800   Attorneys for Defendant 

SUPERIOR COURT OF THE STATE OF CALIFORNIA

COUNTY OF BUTTE

PEOPLE OF THE STATE OF CALIFORNIA,  

vs.  PACIFIC GAS AND ELECTRIC COMPANY, 

Defendant. 

  Case No. 2OCF01422  PLEA AGREEMENT AND SETTLEMENT   

THE PEOPLE OF THE STATE OF CALIFORNIA and the defendant Pacific Gas and Electric Company (the “Company” or “PG&E”),

through its counsel Munger, Tolles & Olson LLP and Clarence, Dyer & Cohen LLP, hereby agree to this Plea and Settlement Agreement (the “Agreement”). 

Subject to the conditions set forth in this Agreement, the Company agrees to enter a plea of guilty to eighty-four (84) counts of involuntary manslaughter in

violation of Cal. Penal Code § 192(b), and one (1) count of unlawfully causing a fire in violation of Cal. Penal Code § 452 and will admit the special allegations

pursuant to Cal. Penal Code §§ 452.1(a)(2),

452.1(a)(3), 452.1(a)(4), as set forth in the indictment in the criminal prosecution of the Company, case number 2OCF01422.

I. INTRODUCTION

This Agreement is made and entered into between the People of the State of California (the “People”), currently represented by the District

Attorney of Butte County (the “DA”) and the defendant, Pacific Gas and Electric  Company (the “Company” or the “PG&E”), currently represented by Munger,

Tolles & Olson LLP and Clarence, Dyer & Cohen LLP.  The People and PG&E are individually referred to herein as “Party” and, collectively, as the “Parties.”

1.          On January 29, 2019, PG&E commenced a voluntary case under Chapter 11 of Title 11 of the United States Code (the “Chapter 11

Cases”) in the United States Bankruptcy Court for the Northern District of California (the “Bankruptcy Court”).

2.          This Agreement is entered into to resolve the criminal prosecution of the Company, case number 2OCF01422, arising out of the November 8,

2018 wildfire in Butte County, California known as the “Camp Fire.”

3.          The DA has determined that entering into this Agreement to resolve the prosecution of the Company is appropriate and in furtherance of

justice based upon a totality of the circumstances and in light of the following:

(a)          The Company’s acceptance of responsibility and agreement to enter the plea described below;

(b)          The Company’s agreement to compensate victims of the Camp Fire, including through:

(i)          The restructuring support agreement entered into on December 6, 2019, by PG&E, certain attorneys representing victims of the

Camp Fire, the “Official Committee of Tort Claimants,” et al., and approved by the Bankruptcy Court on December 19, 2019, providing for, among other things,

the establishment of a “Fire Victim Trust” to compensate victims of the Camp Fire and other wildfires, the payment by PG&E of approximately $13.5 billion in

cash and equity, and the settlement, release, and satisfaction of

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“Fire Victim Claims,” to be effected pursuant to PG&E’s Plan of Reorganization in the Chapter 11 Cases (as amended, supplemented, or otherwise modified, and

to the extent applicable, confirmed by the United States Bankruptcy Court, the “Plan of Reorganization”);

(ii)          The restructuring support agreement entered into on September 22, 2019, by PG&E and certain holders of subrogation claims

and approved by the Bankruptcy Court on December 19, 2019, providing for, among other things, the payment by PG&E of $11 billion and the settlement, release,

and satisfaction of “Subrogation Claims,” to be effected pursuant to the Plan of Reorganization; and

(iii)          The agreements entered into by the Company and certain “Public Entities,” providing for payment by PG&E of $1 billion and

the settlement, release, and satisfaction of “Public Entities Wildfire Claims,” including payments of approximately $270 million to the Town of Paradise,

California, $252 million to Butte County, and $47.5 million to the Paradise Recreation and Park District, to be effected pursuant to the Plan of Reorganization.

(c)          The Company’s cooperation with the DA’s investigation of the Camp Fire.

(d)          The significant risk that a further criminal prosecution of the Company at this time could jeopardize the Company’s ability to pay

victims pursuant to the agreements noted in sections I.3.b(i), (ii), and (iii) above, to be effected pursuant to the Plan of Reorganization, or to participate in the go-

forward wildfire fund established by the State of California pursuant to 2019 Cal. Legis. Serv. Ch. 79 (A.B. 1054) (West).

II. GUILTY PLEA AND SETTLEMENT

The Company knowingly, intelligently, voluntarily, and with the advice of counsel agrees to the following terms:

1.          Acceptance of Responsibility.  The Company acknowledges and accepts criminal responsibility for causing the Camp Fire.

2.          Plea.  Subject to the terms of this Agreement and the promises of the People set forth herein, the Company agrees to plead guilty to eighty-

four (84) counts of involuntary manslaughter in violation of Cal. Penal Code § 192(b) and one (1) count of unlawfully causing a

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fire in violation of Cal. Penal Code § 452 and admit the special allegations pursuant to Cal. Penal Code §§ 452.1(a)(2), 452.1(a)(3), 452.1(a)(4), as set forth in the

indictment in the criminal action against the Company, case number 2OCF01422.

3.          Factual basis.  The Company knowingly, intelligently, voluntarily, and with the advice of counsel, stipulates and agrees that there exists a

sufficient factual basis for the Butte County Superior Court to accept the guilty plea described in section II.2. of this Agreement.

4.          Agreed sentence.  The Parties agree that (i) the Company will be sentenced to pay the maximum total fine and penalty of not more than

($3,486,950.00), which amount includes (a) any applicable base fine, pursuant to Cal. Penal Code § 672, and (b) all related fees, penalties and assessments, and (ii)

no other or additional sentence will be imposed on the Company in the criminal action against the Company, case number 2OCF01422.

5.          Investigative costs.  The Company agrees to pay $500,000.00 to the Butte County District Attorney Environmental and Consumer Protection

Trust Fund to reimburse costs spent on the investigation of the Camp Fire.

6.          Restitution.  Nothing in this Agreement prejudices the rights of any of the heirs of the decedents specified in the indictment returned against

the Company on March 17, 2020, in the criminal action against the Company, case number 2OCF01422, with respect to any claims filed on behalf of the decedents

in the Chapter 11 Cases.  The People, by and through the DA further agree not to oppose any effort by the Company to seek the discharge of claims for restitution

pursuant to Cal. Penal Code § 1202.4 in the Chapter 11 Cases made on the grounds that such claims are satisfied pursuant to the aforementioned agreements and

the Plan of Reorganization.

7.          Waiver and acknowledgment of rights.  The Company understands that it has certain constitutional rights including (a) the right to a speedy

public jury trial at which it would be presumed innocent and could not be convicted unless twelve impartial jurors were convinced of its guilt beyond a reasonable

doubt, (b) the right to confront witnesses and cross-examine witnesses, and (c) the right to produce evidence and issue subpoenas to bring into court all witnesses

and evidence favorable to it.  The Company further understands that by pleading guilty, it is giving up

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its right to a jury trial, its right to confront and cross-examine witnesses, and its right to produce evidence and witnesses on its own behalf.

8.          Waiver of appeal.  Solely for the purpose of this Agreement and the entry of its guilty plea as provided herein, and provided that the Butte

County Superior Court does not impose a sentence in addition to, or other than, as provided herein, the Company knowingly, intelligently, and voluntarily waives

any right to appeal its plea of guilty or any agreed upon sentence.

9.          Release.  Upon approval and acceptance of this Agreement by the Butte County Superior Court and the Bankruptcy Court, the People, by and

through the DA, agree not to prosecute any criminal charges related to or arising out of the Camp Fire against the Company, PG&E Corporation, any wholly-

owned subsidiaries thereof, and their respective successors and assigns, including PG&E Corporation and Pacific Gas and Electric Company, as reorganized

pursuant to the Chapter 11 Cases.

(a)          The People, by and through the DA, agree that the implementation of this Agreement will be in full and final satisfaction, release, and

discharge of the proofs of claim filed by the People, by and through the DA, on October 17 and October 24, 2019 in the Chapter 11 Cases, Claims Nos. 57948,

59642, 65945, 87014, and 87021.  The People, by and through the DA, represent and acknowledge that the aforementioned proofs of claim are the only proofs of

claim submitted by People in the Chapter 11 Cases.

10.          Withdrawal of plea.  The Parties agree that the Company will be entitled to withdraw its guilty plea if:

(a)          This Agreement is not approved and accepted by the Butte County Superior Court;

(b)          Any obligation, including but not limited to fines, penalties, assessments, obligations to pay restitution pursuant to Cal. Penal Code

§ 1202.4 in addition to the settlements described in Section I of this Agreement, and non-monetary obligations, is imposed upon the Company in the criminal case

against the Company, case number 2OCF01422, in addition to or other than the sentence agreed by the Parties as set forth in section II.4 of this Agreement; or

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(c)          This Agreement is not approved by the Bankruptcy Court or the Plan of Reorganization is not confirmed by the Bankruptcy Court on

or before June 30, 2020 or does not become effective in accordance with the terms thereof.

Should the Company for any reason withdraw its plea, the indictment herein referenced shall remain.

For the avoidance of doubt, nothing in this Agreement and this section II.10. is intended to or shall limit the Company’s right to withdraw its

guilty plea as provided in Cal. Penal Code § 1192.5.

11.          Waiver.  PG&E agrees to waive any objections or challenge to:

(a)          Legality of Grand Jury including:

(b)          Qualifications of Grand Jurors, Cal. Penal Code §§ 893, 894;

(c)          Selection of Grand Jurors, Cal. Penal Code §§ 895-902;

(d)          Impaneling of Grand Jury, Cal. Penal Code §§ 904-913;

(e)          Conduct of Grand Jury Investigations, Cal. Penal Code §§ 939-939.1;

(f)          Grand Jury Finding of the Indictment Cal. Penal Code §§ 940-945;

(g)          PG&E specifically agrees to waive any objection/challenge based upon the Cal. Penal Code § 943 requirement that names of witnesses

examined before the grand jury be inserted at the foot of the indictment;

Provided that, for the avoidance of doubt, the waiver contained in this Section II.11 will not be binding on the Company in the event this

Agreement is not accepted and approved by the Butte County Superior Court or the Bankruptcy Court or if the Company’s plea is withdrawn for any reason stated

in Section II.10 above.

III. MISCELLANEOUS PROVISIONS

1.          Cooperation.  The Parties agree to cooperate in good faith and use their reasonable best efforts to obtain approval of this Agreement by

the Bankruptcy Court and the Butte County Superior Court.  The Parties further agree to cooperate in good faith and use reasonable best efforts to incorporate the

provisions of this Agreement into the Plan of Reorganization (or the order confirming the Plan of Reorganization).  The People agree not to

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object to, delay, impede, or take any other action to interfere with, acceptance, confirmation, or implementation of the Plan of Reorganization.

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IT IS SO STIPULATED AND AGREED:

DATED:  3/17/2020          

/s/ MICHAEL L. RAMSEY, ESQ.      MICHAEL L. RAMSEY, ESQ.      Butte County District Attorney           For the People   

DATED:  3/17/2020          

/s/ BRAD D. BRIAN, ESQ.       BRAD D. BRIAN, ESQ.      MICHAEL R. DOYEN, ESQ.      MUNGER, TOLLES & OLSON LLP             Counsel for PG&E  

Exhibit 99.1 

WEIL, GOTSHAL & MANGES LLP Stephen Karotkin (pro hac vice) (stephen.karotkin@weil.com) Ray C. Schrock, P.C. (pro hac vice) (ray.schrock@weil.com) Jessica Liou (pro hac vice) (Jessica.liou@weil.com) Matthew Goren (pro hac vice) (matthew.goren@weil.com) 797 Fifth Avenue New York, NY  10153-0119 Tel:          212 310 8000 Fax:          212 310 8007 KELLER BENVENUTTI KIM LLP Tobias S. Keller (#151445) (tkeller@kbkllp.com) Jane Kim (#298192) (jkim@kbkllp.com) 650 California Street, Suite 1900 San Francisco, CA  94108 Tel:          415 496 6723 Fax:          650 636 9251 Attorneys for Debtors and Debtors in Possession 

CRAVATH, SWAINE & MOORE LLP Paul H. Zumbro (pro hac vice) (pzumbro@cravath.com) Kevin J. Orsini (pro hac vice) (korsini@cravath.com) Omid H. Nasab (pro hac vice) (onasab@cravath.com) 825 Eighth Avenue New York, NY  10019 Tel:          212 474 1000 Fax:          212 474 3700 

UNITED STATES BANKRUPTCY COURT NORTHERN DISTRICT OF CALIFORNIA

SAN FRANCISCO DIVISION In re: PG&E CORPORATION, 

-and- PACIFIC GAS AND ELECTRIC COMPANY, 

Debtors. ◻          Affects PG&E Corporation◻          Affects Pacific Gas & Electric Company☒          Affects both Debtors *All papers shall be filed in the Lead Case, No. 19-30088(DM)

Ch. 11 Lead Case No. 19-30088 (DM) (Jointly Administered)

 DEBTORS’ MOTION PURSUANT TO 11 U.S.C. §§ 105 AND 363 AND FED. R.BANKR. P. 9019 FOR ENTRY OF AN ORDER (I) APPROVING CASE RESOLUTIONCONTINGENCY PROCESS AND (II) GRANTING RELATED RELIEF

 Date:    April 1, 2020Time:   10:00 a.m. (Pacific Time)Place:   United States Bankruptcy Court             Courtroom 17, 16th Floor             San Francisco, CA 94102

 Objection Deadline: March 30, 2020 at 4:00 p.m. (Prevailing Pacific Time)

PG&E Corporation (“PG&E Corp.”) and Pacific Gas and Electric Company (the “Utility”), as debtors and debtors in possession (collectively, “PG&E”

or the “Debtors”)  in  the  above-captioned  chapter  11 cases  (the  “Chapter 11 Cases”),  hereby  submit  this  Motion  for  entry  of  an  order  (i)  approving  the  Case

Resolution Contingency Process (as defined below) attached hereto as Exhibit A, to be implemented in the unlikely event the Debtors fail to meet certain dates

regarding the administration of these Chapter 11 Cases, and (ii) granting related relief.

A proposed  form of  order  granting  the  relief  requested  herein  is  annexed  hereto  as Exhibit B.    In  support  of  the  relief  requested  herein,  the  Debtors

submit the Declaration of Jason Wells (the “Wells Declaration”), filed contemporaneously herewith.

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TABLE OF CONTENTS

Page

I. PRELIMINARY STATEMENT 7         II. JURISDICTION 10         III. BACKGROUND 11           A. General 11           B. AB 1054 11           C. The Debtors’ Plan 11           D. Development of the Case Resolution Contingency Process 13         IV. TERMS OF THE CASE RESOLUTION CONTINGENCY PROCESS 13         V. BASIS FOR RELIEF REQUESTED 18             1. The Case Resolution Contingency Process is a Sound Exercise of the Debtors’ Business Judgment and Should be Approved

Pursuant to Sections 105(a) and 363(b)(1) of the Bankruptcy Code.20

             2. Approval of the Case Resolution Contingency Process is in the Best Interests of the Debtors’ Estates and Should be Approved

Pursuant to Bankruptcy Rule 9019.23

         VI. CONCLUSION 25         VII. NOTICE 26

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TABLE OF AUTHORITIES

Page(s)

Cases     Air Line Pilots Ass'n, Int'l v. Am. Nat'l Bank & Trust Co. (In re Ionosphere Clubs, Inc.),  156 B.R. 414 (S.D.N.Y. 1993), aff’d 17 F.3d 600 (2d Cir. 1993) 25

   In re ASARCO, L.L.C.,  650 F.3d 593 (5th Cir. 2011) 21

   In re AWTR Liquidation Inc.,  548 B.R. 300 (Bankr. C.D. Cal. 2016) 21

   City Sanitation v. Allied Waste Servs. of Mass., LLC (In re Am. Cartage, Inc.),  656 F.3d 82 (1st Cir. 2011) 24

   Comm. of Asbestos-Related Litigants v. Johns-Manville Corp. (In re Johns-Manville Corp.),  60 B.R. 612 (Bankr. S.D.N.Y. 1986) 21   

Official Comm. of Unsecured Creditors of Cybergenics Corp. v. Chinery,  330 F.3d 548 (3d Cir. 2003) (en banc) 20

   In re Drexel Burnham Lambert Grp., Inc.,  124 B.R. 499 (Bankr. S.D.N.Y. 1991) 23, 24

   In re Energy Future Holdings Corp.,  Case No. 14-10979 (CSS) (Bankr. D. Del. Sept. 19, 2016) 21

   In re Exide Techs,  Case No. 13-11482 (KJC) (Bankr. D. Del. Feb. 4, 2015) 22

   In re Integrated Resources, Inc.,  147 B.R. 650 (Bankr. S.D.N.Y. 1992) 21

   In re Laser Realty, Inc. v. Fernandez (In re Fernandez),  2009 Bankr. LEXIS 2849 (Bankr. D.P.R. Mar. 31, 2009) 25

   In re Lionel Corp.,  722 F.2d 1063 (2d Cir. 1983) 20   

In re Manuel Mediavilla, Inc.,  568 B.R. 551 (B.A.P. 1st Cir. 2017) 25

   Martin v. Kane (In re A&C Props.),  784 F.2d 1377 (9th Cir. 1986) 23, 24

   

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In re Montgomery Ward Holding Corp.,  242 B.R. 147 (D. Del. 1999) 21

   Myers v. Martin (In re Martin),  91 F.3d 389 (3d Cir. 1996) 23

   Nellis v. Shugrue,  165 B.R. 115 (S.D.N.Y. 1994) 23, 24

   Newman v. Stein,  464 F.2d 689 (2d Cir. 1972) 23

   In re Pac. Gas & Elec. Co.,  304 B.R. 395 (Bankr. N.D. Cal. 2004) 24

   In re Pac. Gas & Elec. Co.,  Case No. 01-30923 (DM) (Bankr. N.D. Cal. Mar. 27, 2002) 21

   In re Planned Protective Servs., Inc.,  130 B.R. 94 (Bankr. C.D. Cal. 1991) 24

   Port O'Call Invest. Co. v. Blair (In re Blair),  538 F.2d 849 (9th Cir. 1976) 24

   Prot. Comm. for Indep. Stockholders of TMT Trailer Ferry, Inc. v. Anderson,  390 U.S. 414 (1968) 23, 24

   Smith v. Van Gorkom,  488 A.2d 858 (Del. 1985) 21

   Southmark Corp. v. Grosz (In re Southmark Corp.),  49 F.3d 1111 (5th Cir. 1995) 20

   In re Thompson,  965 F.2d 1136 (1st Cir. 1992) 24

   In re TK Holdings Inc.,  Case No. 17-11375 (BLS) (Bankr. D. Del. Dec. 13, 2017) 21

   In re Tronox Inc.,  Case No. 09-10156 (ALG) (Bankr. S.D.N.Y. Dec. 23, 2009) 22

   In re Walter,  83 B.R. 14 (B.A.P. 9th Cir. 1988) 20

   In re WCI Cable, Inc.,  282 B.R. 457 (Bankr. D. Or. 2002) 24

   Woodson v. Fireman's Fund Ins. Co. (In re Woodson),  839 F.2d 610 (9th Cir. 1988) 23, 24

   

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Statutes     11 U.S.C. § 105(a) 20, 21   11 U.S.C. § 363(b) 20, 21   11 U.S.C. § 1107(a) 11   11 U.S.C. § 1108 11   28 U.S.C. § 157 10   28 U.S.C. § 1334 10   28 U.S.C. § 1408 10   28 U.S.C. § 1409 10   Assembly Bill 1054 (Holden, Chapter 79, Statutes of 2019) passim   Cal. Const. Art. I, § 19 (c) 25   Other Authorities     B.L.R. 5011-1(a) 10   Fed. R. Bankr. P. 1015(b) 11   Fed. R. Bankr. P. 2002 26   Fed. R. Bankr. P. 9019 23, 24, 27   Order Referring Bankruptcy Cases and Proceedings to Bankruptcy Judges, General Order 24  10

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MEMORANDUM OF POINTS AND AUTHORITIES

I. PRELIMINARY STATEMENT1

The Debtors remain committed to achieving a fair and equitable resolution of these Chapter 11 Cases – a resolution that affords fair treatment to wildfire

victims and other economic stakeholders, provides Californians with access to safe, reliable, and affordable service, results in a transformed utility, and satisfies the

requirements of Assembly Bill 1054 (Holden, Chapter 79, Statutes of 2019) (“AB 1054”).  To that end, after filing their initial plan of reorganization in September

of last year, the Debtors have engaged in ongoing discussions with representatives of Governor Gavin Newsom (the “Governor’s Office”) regarding the terms of

the Debtors’ restructuring, the requirements of AB 1054, and the concerns expressed in Governor Newsom’s December 13, 2019 letter [Docket No. 5138-1] (the

“December 13 Letter”).

The Plan now on file resolves the Debtors’ prepetition liabilities and provides fair and expeditious compensation to wildfire victims.  Among other things,

the Plan provides:

● Approximately $13.5 billion of cash and common stock of Reorganized PG&E Corp. for the payment of individual and other wildfire claims;

● $11 billion in cash to satisfy insurance subrogation claims;

● Reinstatement of $9.575 billion in existing, prepetition Utility funded debt claims;

● Refinancing of $11.85 billion in existing, prepetition Utility debt with newly issued debt; and

● Payment in full of general unsecured claims and certain other liabilities, with interest at the legal rate.

The Debtors intend to fund the obligations under the Plan, including the Debtors’ contributions to the Go-Forward Wildfire Fund created under AB 1054,

from a variety of sources as described in the Plan OII2 and as set forth below:

1 Capitalized terms used but not herein defined have the meanings ascribed to such terms in the Debtors’ and Shareholder Proponents’ Joint Chapter 11Plan of Reorganization dated March 16, 2020 [Docket No. 6320] (the “Plan”).

2 The CPUC proceeding related to the Chapter 11 Cases, (I.) 19-09-016, “Order Instituting Investigation on the Commission’s Own Motion to Considerthe Ratemaking and Other Implications of a Proposed Plan for Resolution of Voluntary Case filed by Pacific Gas and Electric

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The  Debtors  also  contemplate  a  single  post-emergence  30-year  securitization  transaction  of  approximately  $7.5  billion  (the  “Securitization”),  with

reduced principal payments in the early years, which would replace the Temporary Utility Debt and be neutral, on average, to customers and also would accelerate

the deferred payments to the Fire Victim Trust to be funded under the Plan.   The Securitization includes offsetting credits  to be funded initially from a reserve

account and further funded with the value of net operating losses contributed in the year in which the net operating losses are utilized.  The Securitization structure

is anticipated to yield a full (nominal) offset each year to securitized charges.  The Plan is not contingent on the approval of the Securitization and, as noted below,

in the event the Securitization is not approved, the Debtors have committed to use the proceeds of the net operating losses to amortize the Temporary Utility Debt

referred to in the above chart.

In addition to the financial  restructuring embodied in the Plan,  the Debtors have committed to a number of changes to their  corporate governance and

regulatory affairs.  As described in the Debtors’ Post-Hearing Brief filed on March 13, 2020 in the Plan OII (the “Debtors’ OII Proposals”), the Debtors have

agreed to substantial modifications relating to PG&E’s board of

Company, pursuant to Chapter 11 of the Bankruptcy Code, in the United States Bankruptcy Court, Northern District of California, San Francisco Division, In rePacific Gas and Electric Corporation and Pacific Gas and Electric Company, Case No. 19-30088” (the “Plan OII”).

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directors,  Utility  safety,  general  corporate  governance  and  operations,  and  executive  compensation,  and  an  enhanced  oversight  and  enforcement  process.    The

Debtors’  OII  Proposals,  in  large  part,  support  the  proposals  in  the  ruling  issued by  the  CPUC Assigned Commissioner  in  the  Plan  OII  to  address  the  Debtors’

governance and organization, and the Debtors also have agreed to work with the Governor’s Office on certain of the initial corporate governance matters.

In addition to the foregoing,  the Debtors also have agreed in connection with and subject  to,  among other  things,  the approval  of  the Case Resolution

Contingency Process and the Governor’s support for the Plan and the Securitization, to implement certain other commitments as further described below.

This Motion reflects the final component of the Debtors’ comprehensive restructuring – an agreement with the Governor’s Office on the case resolution

contingency process set forth in Exhibit A hereto and described below (the “Case Resolution Contingency Process”), which addresses the unlikely circumstance

in which the Plan is not confirmed or fails to go effective in accordance with certain required dates.

In summary, as more fully described below, if the Confirmation Order is not entered by June 30, 2020, the Debtors will appoint a Chief Transition Officer

(the “CTO”)3 and will  commence a sale process.    If  the Confirmation Order is entered by June 30, 2020, but the Effective Date of the Plan does not occur by

September  30,  2020,  the Debtors  will  appoint  the CTO, which will  extend the deadline for  the occurrence of  the Effective  Date to  December  31,  2020.    If  the

Effective Date does not occur by such extended date, the Debtors will then commence the sale process.

While the Debtors continue to believe that the Plan as previously proposed complies with AB 1054, the Debtors believe that the foregoing commitments

address all of the concerns raised in the Governor’s December 13 Letter.  The Debtors’ management and professionals have worked diligently with the Governor’s

Office in order to build the state’s confidence that the Reorganized

3 The authority and scope of responsibility of the CTO are set forth on Annex A to the Case Resolution Contingency Process.

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Utility will meet the needs of the state while providing safe, reliable, and affordable service for its 16 million customers.

Therefore, by this Motion the Debtors seek entry of an order authorizing and approving the Case Resolution Contingency Process (the “Case Resolution

Contingency Process Order”).  The Case Resolution Contingency Process will be an exhibit to the Case Resolution Contingency Process Order and incorporated

by reference as if fully set forth therein.  Approval of the Case Resolution Contingency Process will facilitate the Debtors’ ability to timely exit these Chapter 11

Cases, provide a positive signal to the financing markets, and further solidify support for the Plan and the likelihood of a smooth and largely consensual resolution

of these Chapter 11 Cases.

The Debtors’  support  for  the  Case  Resolution  Contingency  Process  Order  is  based  on,  and  subject  to,  the  Debtors’  understanding  that  the  Governor’s

Office will file a responsive pleading in the Bankruptcy Court prior to the hearing on the Motion stating (1) if the relief requested in the Motion is granted and the

CPUC approves the Debtors’ Plan with governance, financial and operational proposals consistent with the Debtors’ OII Proposals, and such modifications as the

CPUC believes are appropriate, the Plan will, in the Governor’s judgment, be compliant with AB 1054, and (2) the Securitization (subject to CPUC approval), if it

meets all legal requirements, would be in the public interest and would strengthen the Utility’s go-forward business.

Accordingly,  as  set  forth  below,  entry  into,  and  approval  of,  the  Case  Resolution  Contingency  Process  represents  a  sound  exercise  of  the  Debtors’

business judgment and should be approved.

II. JURISDICTION

The Court  has  jurisdiction  to  consider  this  matter  pursuant  to  28 U.S.C.  §§ 157 and 1334,  the Order Referring Bankruptcy Cases and Proceedings to

Bankruptcy Judges,  General Order 24 (N.D. Cal. Feb. 22, 2016), and Rule 5011-1(a) of the Bankruptcy Local Rules for the United States District Court for the

Northern District of California.  This is a core proceeding pursuant to 28 U.S.C. § 157(b). Venue is proper before the Court pursuant to 28 U.S.C. §§ 1408 and

1409.

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III. BACKGROUND

A. General

On January 29, 2019 (the “Petition Date”), the Debtors commenced voluntary cases under chapter 11 of the Bankruptcy Code.  The Debtors continue to

operate  their  businesses  and  manage  their  properties  as  debtors  in  possession  pursuant  to  section  1107(a)  and  1108  of  the  Bankruptcy  Code.    No  trustee  or

examiner has been appointed in either of the Chapter 11 Cases.    The Chapter 11 Cases are being jointly administered for procedural  purposes only pursuant to

Bankruptcy Rule 1015(b).

Additional  information  regarding  the  circumstances  leading  to  the  commencement  of  the  Chapter  11  Cases  and  information  regarding  the  Debtors’

businesses and capital structure is set forth in the Amended Declaration of Jason P. Wells in Support of First Day Motions and Related Relief [Docket No. 263].

B. AB 1054

On July 12,  2019,  Governor Newsom signed into law AB 1054,  which,  among other  things,  establishes  a  statewide fund (the “Go-Forward Wildfire

Fund”) that participating utilities may access to pay for liabilities arising in connection with wildfires that occur after July 12, 2019.  The Debtors’ ability to access

the Go-Forward Wildfire Fund is subject to the conditions set forth in the statute, including confirmation of a plan of reorganization that meets certain requirements

by no later than June 30, 2020.  A condition to the occurrence of the Effective Date of the Plan is the Bankruptcy Court’s approval of the Debtors’ participation in

the Go-Forward Wildfire Fund is in full force and effect.

C. The Debtors’ Plan

On September  9,  2019,  the  Debtors  filed  their  original  joint  chapter  11  plan  of  reorganization  [Docket  No.  3841],  which  was  thereafter  amended  on

September 23, 2019 [Docket No. 3966] and November 4, 2019 [Docket No. 4563] (collectively, the “Debtors’ Original Plan”).

On  December  6,  2019,  the  Debtors,  certain  funds  and  accounts  managed  or  advised  by  Knighthead  Capital  Management,  LLC and  certain  funds  and

accounts managed or advised by Abrams Capital Management, L.P. (together, the “Shareholder Proponents”), the Tort Claimants

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Committee,  and  certain  professionals  representing  approximately  70%  in  number  of  the  holders  of  Fire  Victim  Claims  entered  into  an  agreement  (the  “Tort

Claimants RSA”) to resolve, among other things, the treatment and discharge of individual Fire Victim Claims under the Debtors’ Original Plan, as amended to

incorporate the terms of the settlement embodied in the Tort Claimants RSA.  Prior to entering into the Tort Claimants RSA, the Debtors previously negotiated

settlements with the holders of Public Entities Wildfire Claims and the holders of Subrogation Wildfire Claims.  On December 19, 2019 [Docket No. 5174], the

Court entered an order approving the Tort Claimants RSA.

On January 22, 2020, the Debtors, the Shareholder Proponents, and certain members of the Ad Hoc Noteholder Committee entered into an agreement (the

“Noteholder RSA”) to, among other things, resolve all issues relating to the treatment of the Utility’s prepetition funded debt under the Debtors’ and Shareholder

Proponents’ Plan.  On February 5, 2020, the Court entered an order approving the Noteholder RSA [Docket No. 5637].

The  Plan,  filed  on  March  16,  2020  [Docket  No.  6320],  incorporates  the  terms  of  the  settlements  embodied  in  the  Subrogation  Claims  RSA and  plan

treatment set forth in the Tort Claimants RSA and the Noteholder RSA.  Among other things, the Plan also provides for (i) payment in full, with interest at the legal

rate, reinstatement, or refinancing of all prepetition funded debt obligations, all prepetition trade claims, and employee-related claims, (ii) assumption of all power

purchase  agreements  and community  choice  aggregation  servicing  agreements,  and (iii)  assumption of  all  pension obligations,  other  employee obligations,  and

collective bargaining agreements with labor.  The Plan represents a global consensus and has the support of all classes of fire victim claims and virtually all other

voting classes.

In addition, the Debtors believe the Plan provides for and will allow the Debtors to participate in the Go-Forward Wildfire Fund and satisfaction of the

legislative requirements of AB 1054.  Of course, such compliance is subject to the review and approval of the CPUC, which approval process is underway.

The Debtors’ Disclosure Statement with respect to the Plan has been approved by the Bankruptcy Court and the solicitation of votes with respect to the

Plan will commence shortly.

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D. Development of the Case Resolution Contingency Process

Since  the  filing  of  the  Debtors’  Original  Plan,  the  Plan  Proponents  and  their  advisors  have  been  engaged  in  ongoing  discussions  with  the  Governor’s

representatives and advisors to discuss the restructuring and the implications of AB 1054.  These discussions have focused largely on safety, corporate governance

and  operation  of  the  Utility,  and  assuring  that  the  Reorganized  Debtors’  capital  structure  will  be  stable,  flexible,  and  will  position  the  Reorganized  Debtors  to

attract long-term capital. The Plan Proponents have also sought to address a primary concern expressed by the Governor that the state of California must have some

realistic alternative available if the Plan is not consummated within the timeframe set forth in AB 1054.

On December 13, 2019, Governor Newsom informed the Debtors that the Debtors’ Original Plan and related restructuring transactions provided therein

did not, in his judgment, comply with AB 1054 and, therefore, would not result in a reorganized entity positioned to meet the compact of providing safe, reliable

and affordable service to the Debtors’ customers.

Ultimately, these discussions culminated in the Case Resolution Contingency Process, which together with the filing of the Utility’s March 13, 2020 brief

in the Plan OII that incorporates the Debtors’ OII Proposals and the undertakings described below, address the issues raised in the December 13 Letter and, the

Debtors  believe,  will  lead  to  the  support  of  the  Governor’s  Office  for  the  Plan.    The  Case  Resolution  Contingency  Process  will  provide  for  and  facilitate  an

expeditious and successful resolution of these Chapter 11 Cases and avoid the need, expressed by the Governor’s Office, for the state of California to seek relief in

this Court that could undermine the timely confirmation and consummation of the Plan.

IV. TERMS OF THE CASE RESOLUTION CONTINGENCY PROCESS

A summary of the terms and provisions of the Case Resolution Contingency Process is set forth below.4

4 The  following  summary  is  qualified  in  its  entirety  by  the  terms  of  the  Case  Resolution  Contingency  Process  annexed  hereto.    In  the  event  of  anydiscrepancy between this summary and the terms of the Case Resolution Contingency Process, the terms of the Case Resolution Contingency Process shall govern.

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 Failure to Meet Required Dates 

 The  Debtors  will  obtain  entry  of  the  Case  Resolution  Contingency  Process  Order  which  shall  require  theConfirmation Order (a proposed form of which the Debtors will submit in form and substance acceptable tothe Governor’s Office, provided that if the Bankruptcy Court declines to enter such order unless the Debtorsmodify the Order in a manner not acceptable to the Governor’s Office, the Debtors may modify the order toaddress the Bankruptcy Court’s  requirements)  to be entered by June 30,  2020 (the “Confirmation OrderRequired Date”); provided, that neither of the following shall constitute a failure to meet the ConfirmationOrder  Required  Date:  (i)  the  Confirmation  Order  contains  conditions  subsequent  related  to  the  entry  of,appeal  of,  or  compliance  with  the  CPUC’s  decision  in  the  Plan  OII  or  (ii)  the  pendency  of  any  appeal,motion for reconsideration or similar relief of the Confirmation Order. In the event the Confirmation Order Required Date does not occur on or prior to June 30, 2020: 1.                    The  Debtors  shall  be  authorized  and  directed,  no  later  than  ten  (10)  business  days  after  the

Confirmation Order Required Date has not been met, to appoint a Chief Transition Officer (CTO),with  the  authority  and  scope  of  responsibility  set  forth  on  Annex  A  to  the  Case  ResolutionContingency Process;

 2.                   The Debtors  and the  Governor’s  Office  shall  agree  to  (or,  if  no such agreement  is  reached,  the

Bankruptcy Court shall order pursuant to the process set forth in the Case Resolution ContingencyProcess)  a  form  of  bidding  procedures  (as  ordered  by  the  Bankruptcy  Court,  the  “BiddingProcedures”), which Bidding Procedures shall include the provisions described below;

 3.                   The Debtors  shall  be  authorized and directed to  commence the Sale  Process  (defined below) in

accordance with the Bidding Procedures; and 4.           The CTO shall remain in place until the completion of the Sale Process. The Case Resolution Contingency Process Order and the Confirmation Order shall require that the EffectiveDate of the Plan is to occur by September 30, 2020, subject to the following: 1.         If the Effective Date has not occurred by September 30, 2020, the Debtors shall be authorized and

directed,  no  later  than  ten  (10)  business  days  after  such  date,  to  appoint  a  CTO to  the  extent  notalready appointed.

 2.         The CTO shall remain in place until the earlier of (a)  

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               completion of the Sale Process, if a sale process is required, or (b) the Effective Date of a Plan.

3.         If the CTO is appointed as required above, then the deadline for the Effective Date shall be extendedto  December  31,  2020 (the  “Effective Date Required Date”).  If  (i)  the  CTO is  not  appointed  orretained as required above or (ii) the Effective Date has not occurred by the Effective Date RequiredDate, then the Debtors shall pursue a Sale Process in accordance with the Bidding Procedures.

   Operational Observer 

 The Case Resolution Contingency Process Order shall provide that,  upon entry of such Order, the state ofCalifornia  can  select  an  operational  observer  (the  “Operational Observer”).  The  Operational  Observershall have the right to observe the Debtors’ compliance and progress with respect to natural gas operationsand safety and wildfire and other disaster mitigation activities including: vegetation management programs;system  hardening  programs  (both  electrical  infrastructure  and  microgrid  implementation);  risk  analysis;implementation of mitigation measures (including the use of and effectiveness of the Emergency OperationsCenter  and  PSPS);  public  and  workforce  safety;  and  programs  to  assure  compliance  with  any  applicablesafety and operational metrics. The Operational Observer shall have the authority to observe meetings of theboards of directors (including committee meetings) and management  meetings related to performance andsafety  issues,  conduct  field  visits,  interviews  and  inspections,  review  documentation  related  to  safetyperformance,  and  undertake  any  other  tasks  reasonably  required  in  furtherance  of  its  duties.5   TheOperational Observer shall provide periodic reports to the Utility CEO, the Debtors’ boards of directors, andthe Governor’s Office.  The Operational Observer shall not divulge confidential or proprietary informationof the Debtors without the Debtors’ consent; provided, that the Debtors shall be deemed to have consentedto the disclosure of such information to the Governor’s Office and its advisors. 

 Chief Transition Officer 

 If a CTO is required to be appointed pursuant to the Case Resolution Contingency Process, the Debtors shallselect the Operational Observer as the CTO or, if the Operational  

5 The Reorganized Debtors may limit the Operational Observer’s attendance at meetings or access to information based on a claim of privilege only if, inthe opinion of counsel, such restriction is necessary to preserve the privilege.

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   Observer  is  not  available  or  able  to  take  on  the  role,  another  named  individual  or  firm  from  a  list  ofidentified candidates.  If  the CTO is replaced,  the subsequent CTO must also be selected from such list  ofidentified candidates. If a CTO is required to be appointed pursuant to the Case Resolution Contingency Process, the CTO shallhave  the  authority  and  scope  of  responsibility  set  forth  in  Annex  A  to  the  Case  Resolution  ContingencyProcess.

 Bidding Procedures 

 The Bidding Procedures shall include, among other things, the following: 1.          Provisions authorizing and directing the Debtors to conduct the Sale Process. 2.          A schedule that allows for the closing of a sale (or effective date of a plan) no later than September

30, 2021. 3.                 Provisions  that  allow  the  state  of  California  or  a  bidder  supported  by  the  state  of  California  to

participate as a bidder in the process. 4.                  Customary  confidentiality  and  non-disclosure  provisions  applicable  to  all  bidders  or  potential

bidders participating in the process. 5.          Provisions that prohibit extension or modification of any dates set forth in the Bidding Procedures to

the extent such extensions or modifications would result in a process being unable to be completedby September 30, 2021 or would limit the ability of a bidder supported by the state of California toparticipate as a bidder in the process, without such extension or modification being consented to bythe  Governor’s  Office  or  approved  by  the  Bankruptcy  Court;  provided,  that  in  the  event  such  amodification or extension is ordered without the consent of the Governor’s Office, exclusivity shallbe immediately terminated without further order of the Bankruptcy Court for the state of California,or a party supported by the state of California, to sponsor a plan for either or both Debtors.

 6.                    Provisions  that  permit  the  Debtors’  boards  of  directors  to  exercise  their  fiduciary  duties  under

applicable law in connection with the Sale Process; provided, that (i) the Debtors shall not terminatethe Sale Process without the consent of the Governor’s Office or approval of the Bankruptcy Courtand (ii) in the event the Debtors terminate the Sale Process without the consent of the 

 

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   Governor's  Office,  exclusivity  shall  be  immediately  terminated  without  further  order  of  theBankruptcy Court for the state of California or a party supported by the state of California to sponsora plan for either or both Debtors. 

 7.         Provisions setting forth the responsibilities of the Sale Committee(s) (defined below). 8.                Provisions  setting  forth  qualification  requirements  for  bidders,  which  shall  permit  the  state  of

California or a party supported by the state of California to qualify as a bidder.

 Sale Process 

 1.          No later than ten (10) business days after the date on which a Sale Process is required to be pursued

pursuant to the terms of the Case Resolution Contingency Process, the Debtors shall be authorizedand directed to appoint a sale committee (the “Sale Committee”) of the board of directors of PG&ECorp.  (and,  to  the  extent  necessary,  to  appoint  a  similar  committee  with  the  same  members  andscope  of  the  Utility).    The  members  of  such  Sale  Committee(s)  shall  be  selected  by  the  Debtors’boards of directors and be acceptable to the Governor’s Office. The Sale Committee(s) shall overseethe  Sale  Process  and  make  recommendations  to  the  full  boards  of  directors  regarding  the  SaleProcess.

 2.          The Debtors’ shall appoint a Chief Restructuring Officer to manage the Sale Process and report to

the  Sale  Committee.  The  Debtors’  current  Chief  Restructuring  Officer  shall  fulfill  that  function;provided,  that  if  the  Debtors’  current  Chief  Restructuring  Officer  is  not  available  to  fulfill  suchfunction,  the  Sale  Committee  shall  select  a  nationally  recognized  replacement  with  similarcharacteristics and experience to fulfill such function.

 3.                    If  a  Sale  Process  is  required,  the Debtors  shall  be athorized and directed to implement  the Sale

Process in a manner consistent with the Bidding Procedures and on the timeframes set forth thereinand subject to the terms of the Case Resolution Contingency Process.

 4.                   Unless the Governor’s Office otherwise agrees,  the Debtors shall be authorized and directed, no

later than ten (10) business days after the later of (i) the date on which a Sale Process is required tobe pursued pursuant to the terms of the Case Resolution Contingency Process,  and (ii)  the date ofentry of the Bidding Procedures, to file a 

 

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   motion  (the  “Sale Motion”)  with  the  Bankruptcy  Court  proposing  a  sale  process  that  containsprovisions allowing qualified bidders to bid for either a purchase of substantially all of the assets ora  plan  sponsorship  proposal  that  would  result  in  the  plan  sponsor  owning  the  equity  of  theReorganized Debtors or the Reorganized Utility and is consistent with the Bidding Procedures andotherwise in form and substance acceptable to the Governor’s Office, the Sale Committee(s), andthe Board(s) (the “Sale Process”).   

 5.            The Sale Process shall be conducted in accordance with the Bankruptcy Code and the California

Public Utilities Code. The Debtors shall be authorized and directed to do the following: 1.             Take all actions necessary to implement this requirement as soon as possible. 2.             Take all actions necessary to prepare for the Sale Process so that the Sale Process, if required, can

be implemented on the timeframes set forth in the Case Resolution Contingency Process.

As stated above, in connection with and subject to the approval of the Case Resolution Contingency Process, the Governor’s Office’s support for the Plan

and the Securitization, and the occurrence of the Plan Effective Date, the Debtors have agreed to certain other matters as follows:

a) Dividend Restriction.  Reorganized  HoldCo will  not  pay common dividends  until  it  has  recognized  $6.2  billion  in  Non-GAAP Core  Earningsfollowing the Effective Date. That amount would be deployed as capital investment or reduction in debt.   “Non-GAAP Core Earnings” meansGAAP  earnings  adjusted  for  those  non-core  items  identified  in  the  Disclosure  Statement.6   This  limitation  on  dividends  will  delay  therecommencement  of  common  dividends  by  approximately  one  year  as  compared  to  the  financial  projections  provided  in  the  DisclosureStatement;

b) Fire  Victim  Claims  Costs.  As  noted  above,  the  Reorganized  Utility  intends  to  file  an  application  with  the  CPUC  for  approval  of  theSecuritization.  If the CPUC does not grant approval of the Securitization, the Reorganized Utility will not seek to 

6 See Disclosure Statement for Debtors’ and Shareholder Proponents’ Joint Chapter 11 Plan of Reorganization, dated March 17, 2020, Exhibit B, p. 168[Docket  No.  6353].    The  non-core  items  identified  in  the  Disclosure  Statement  are  Bankruptcy  and  Legal  Costs;  Investigation  Remedies  and  Delayed  CostRecovery; GT&S Capital Audit; Amortization of Wildfire Insurance Fund Contribution; and Net Securitization Inception Charge.  Id. at 174.

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recover in rates any portion of the amounts paid in respect of Fire Claims under the Plan;

c) Purchase Option. On February 18, 2020, in the Plan OII, the Assigned Commissioner issued a ruling that set forth various proposals.  One suchproposal  was  an  Enhanced  Regulatory  Reporting  and  Enforcement  Process  (“Enhanced Regulatory Process”)  that  includes  six  steps  to  beimplemented over an extended period of time which could, under extreme circumstances, culminate in a review and potential revocation of theUtility’s certificate of public convenience and necessity (“CPCN”), i.e., its license to operate as a public utility.  The Debtors agree that if theCPUC revokes the CPCN through the Enhanced Regulatory Process, the state of California will have the option to purchase all of the issued andoutstanding equity interests of the Reorganized Utility (including common stock and any options or other equity awards issued or granted by theReorganized  Utility),  directly  or  via  a  state-designated  entity,  at  an  aggregate  price  to  the  holders  of  such  equity  interests  equal  to  (i)  theestimated one-year forward income computed by reference to rate base times equity ratio times return on equity (in each case as authorized bythe CPUC and FERC), multiplied by (ii) the average one-year forward Price to Earnings ratio of the utilities then comprising the PhiladelphiaUtilities Index (“PHLX”), multiplied by 0.65; and

d) Net  Operating  Losses.    The  Debtors’  payment  of  wildfire  claims  under  the  Plan  will  result  in  substantial  net  operating  losses  (“NOLs”). Consistent  with  the  Debtors’  financial  projections  provided  in  the  Disclosure  Statement,  the  Reorganized  Utility  agrees  to  use  cash  flowsgenerated  by  application  of  these  NOLs  in  future  years  in  connection  with  the  Securitization.    If  this  Securitization  is  not  approved  orconsummated, the Reorganized Utility agrees to use these cash flows to amortize the $6 billion in Temporary Utility Debt referred to in the chartabove.

The  Debtors  also  have  agreed,  subject  to  the  approval  of  this  Motion  and  the  Governor’s  Office’s  support  for  the  Plan  and  the  Securitization,  to  the

following:

● As a condition to the occurrence of the Plan Effective Date, the secured debt to be issued in connection with the funding of the Plan shall receivean investment grade rating from at least one of Standard & Poor’s or Moody’s on the Effective Date.  This condition may be waived with theconsent solely of the Plan Proponents and the Governor’s Office; and

● The Plan Documents (including documents included in the Plan Supplement)  and any amendments  to the Plan will  be in form and substanceacceptable to the Governor’s Office; provided, that if the Court declines to enter a form of Confirmation Order or to confirm the Plan unless thePlan  Proponents  modify  the  Confirmation  Order  or  the  Plan  in  a  manner  not  acceptable  to  the  Governor’s  Office,  the  Plan  Proponents  maymodify the Confirmation Order to address the Court’s requirements.

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V. BASIS FOR RELIEF REQUESTED

The Debtors believe that the Case Resolution Contingency Process, along with the Debtors’ OII Proposals, as those proposals may be modified by the

CPUC,  and  the  other  undertakings  described  herein  will  satisfy  the  state’s  objectives  and  will  secure  the  Governor’s  Office’s  support  for  confirmation  and

consummation of the Plan. The Debtors also believe the Case Resolution Contingency Process and the commitments of the Debtors therein address the concerns

raised  in  the  December  13  Letter.  The  Debtors  believe  that  the  Case  Resolution  Contingency  Process  together  with  the  Debtors’  OII  Proposals  represent  a

milestone in these Chapter 11 Cases, will facilitate access to the Go-Forward Wildfire Fund, and will pave the way for confirmation of the Plan in keeping with the

June 30, 2020 deadline of AB 1054.

1. The Case Resolution Contingency Process is a Sound Exercise of the Debtors’ Business Judgment and Should be Approved Pursuant toSections 105(a) and

363(b)(1) of the Bankruptcy Code.

The  Court  may  approve  the  Case  Resolution  Contingency  Process  pursuant  to  sections  105(a)  and  363(b)  of  the  Bankruptcy  Code.    Section  363(b)

provides,  in pertinent  part,  that  “[t]he [debtor],  after  notice and a hearing,  may use,  sell,  or  lease,  other than in the ordinary course of business,  property of the

estate.”  11 U.S.C. § 363(b)(1).  Section 105(a) further provides that the “court may issue any order, process, or judgment that is necessary or appropriate to carry

out  the  provisions  of  this  title.”  11  U.S.C.  §  105(a).    Section  105(a)  has  been  interpreted  to  provide  Bankruptcy  Courts  with  broad  equitable  powers  to  “craft

flexible remedies that, while not expressly authorized by the Code, effect the result the Code was designed to obtain.”  Official Comm. of Unsecured Creditors of

Cybergenics Corp. v. Chinery, 330 F.3d 548, 568 (3d Cir. 2003) (en banc); see also Southmark Corp. v. Grosz (In re Southmark Corp.), 49 F.3d 1111, 1116 (5th

Cir. 1995) (section 105(a) of the Bankruptcy Code “authorizes bankruptcy courts to fashion such orders as are necessary to further the substantive provisions of the

Code”).    Together,  these sections of the Bankruptcy Code provide the Court with ample authority and discretion to grant the relief  requested herein.   See In re

Lionel Corp.,  722  F.2d  1063,  1071  (2d  Cir.  1983);  In re Walter,  83  B.R.  14,  17  (B.A.P.  9th  Cir.  1988)  (“The  bankruptcy  court  has  considerable  discretion  in

deciding whether to approve or disapprove the use of estate property by a debtor in possession, in the light

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of  sound  business  justification.”);  In  re  ASARCO,  L.L.C.,  650  F.3d  593,  601  (5th  Cir.  2011)  (“The  business  judgment  standard  in  section  363  is  flexible  and

encourages discretion.”); In re Montgomery Ward Holding Corp., 242 B.R. 147, 153 (D. Del. 1999) (use of assets outside the ordinary course of business permitted

if “sound business purpose justifies such actions”); Comm. of Asbestos-Related Litigants v. Johns-Manville Corp. (In re Johns-Manville Corp.), 60 B.R. 612, 616

(Bankr. S.D.N.Y. 1986) (“Where the debtor articulates a reasonable basis for its business decisions (as distinct from a decision made arbitrarily or capriciously),

courts will generally not entertain objections to the debtor’s conduct.”).

Once a  debtor  articulates  a  valid  business  justification  under  section 363 of  the  Bankruptcy  Code,  a  presumption arises  that  the  debtor’s  decision was

made on an informed basis, in good faith, and in the honest belief that the action was in the best interest of the company.  In re Integrated Resources, Inc., 147 B.R.

650,  656  (Bankr.  S.D.N.Y.  1992)  (quoting Smith v. Van Gorkom,  488  A.2d  858,  872  (Del.  1985));  see also, In re AWTR Liquidation Inc.,  548  B.R.  300,  314

(Bankr. C.D. Cal. 2016) (referencing the Cal. Prac. Guide: Corps. (The Rutter Group 2015) Ch. 6-C); In re Johns-Manville Corp., 60 B.R. at 615-16 (“[T]he Code

favors the continued operation of a business by a debtor and a presumption of reasonableness attaches to a debtor’s management decisions”).

Courts have relied on both sections 363(b) and 105(a) when approving compromises that support a plan and benefit the estate and the other stakeholders,

such as the Case Resolution Contingency Process, routinely finding that such relief is entirely consistent with the applicable provisions of the Bankruptcy Code. 

See, e.g. , In re Pac. Gas & Elec. Co.,  Case No. 01-30923 (DM) (Bankr.  N.D. Cal.  Mar.  27, 2002) [Docket No. 5558] (order approving proposed settlement of

approximately $2 billion in asserted unsecured claims against  the debtor as part  of plan support  agreement  under sections 363(b) and 105(a) of the Bankruptcy

Code); In re TK Holdings Inc., Case No. 17-11375 (BLS) (Bankr. D. Del. Dec. 13, 2017) [Docket No. 1359] (order approving postpetition plan support agreement

pursuant to sections 363(b) and 105(a) of the Bankruptcy Code); In re Energy Future Holdings Corp., Case No. 14-10979 (CSS) (Bankr. D. Del. Sept. 19, 2016)

[Docket No. 9584] (order granting debtors’ motion pursuant to sections 363(b) and 105(a)

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of the Bankruptcy Code to enter into and perform under plan support agreement); see also In re Exide Techs, Case No. 13-11482 (KJC) (Bankr. D. Del. Feb. 4,

2015) [Docket No. 3087] (order authorizing debtor to enter into plan support agreement pursuant to sections 363(b) and 105(a) of the Bankruptcy Code); In re

Tronox Inc., Case No. 09-10156 (ALG) (Bankr. S.D.N.Y. Dec. 23, 2009) [Docket No. 1030] (same).

The  Case  Resolution  Contingency  Process  was  formulated  and  agreed  to  after  months  of  substantial  arms’-length,  good  faith  discussions  with  the

Governor’s  Office.    The  Debtors  believe  the  approval  of  the  Case  Resolution  Contingency  Process,  together  with  the  Debtors’  OII  Proposals,  and  the  other

undertakings described above, address the issues raised in the December 13 Letter.  The support of the Governor’s Office for the Plan represents a significant step

forward in these Chapter 11 Cases and eliminates the substantial costs, risks, and uncertainties that would otherwise be incurred with respect to a potential action

by the state of California to pursue a state takeover of the Utility as previously noted in the Governor’s Financing Objection [Docket No. 5445].

In  addition,  the  Case  Resolution  Contingency  Process  benefits  the  Debtors’  estates  and  constituents  by  providing  a  clear  process  and  timeline  for  the

resolution of these Chapter 11 Cases in the unlikely event that the Debtors are unable to obtain confirmation and consummation of the Plan as set forth in the Case

Resolution Contingency Process.

In view of the foregoing, the Debtors concluded that agreement to the Case Resolution Contingency Process is in the best interests of the Debtors, their

estates and their economic stakeholders.  The Debtors, with the assistance and advice of their retained professionals, have fully evaluated the assertions made and

issues raised in the December  13 Letter,  as  well  as the risks of  failing to meet  the requirements  of  AB 1054 and of  contesting a potential  state  takeover  of  the

Utility.    The  Debtors  have  determined  that,  against  that  backdrop,  agreement  to  the  Case  Resolution  Contingency  Process  and  achieving  the  support  of  the

Governor’s Office is a prudent exercise of the Debtors’ business judgment.

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2. Approval of the Case Resolution Contingency Process is in the Best Interests of the Debtors’ Estates and Should be Approved Pursuantto Bankruptcy Rule 9019.

The Debtors further submit that approval of the Case Resolution Contingency Process is in the best interests of the Debtors’ estates and all stakeholders

and should be approved as a compromise under Bankruptcy Rule 9019, in the event such rule is applicable.

Bankruptcy Rule 9019(a) provides “[o]n motion by the trustee and after notice and a hearing, the court may approve a compromise and settlement.” Fed.

R. Bankr. R. 9019(a).  This rule empowers Bankruptcy Courts to approve settlements “if they are in the best interests of the estate.” In re Drexel Burnham Lambert

Grp., Inc., 124 B.R. 499, 505 (Bankr. S.D.N.Y. 1991); see also Myers v. Martin (In re Martin), 91 F.3d 389, 394 (3d Cir. 1996).  Compromises and settlements are

normal and welcomed occurrences in chapter 11 because they allow a debtor and its creditors to avoid the financial and other burdens associated with litigation

over contentious issues and expedite the administration of the bankruptcy estate.  See Prot. Comm. for Indep. Stockholders of TMT Trailer Ferry, Inc. v. Anderson,

390 U.S. 414, 424 (1968); Martin v. Kane (In re A&C Props.),  784 F.2d 1377, 1380-81 (9th Cir.  1986).    The decision to approve a particular  compromise lies

within the sound discretion of the Court.  See Nellis v. Shugrue, 165 B.R. 115, 123 (S.D.N.Y. 1994); Woodson v. Fireman's Fund Ins. Co. (In re Woodson), 839

F.2d 610, 620 (9th Cir. 1988).  A proposed compromise and settlement should be approved when it is “fair and equitable” and “in the best interest of the [debtor’s]

estate.” In re A&C Props., 784 F.2d at 1381.  The court must apprise itself “of all facts necessary for an intelligent and objective opinion of the probabilities of

ultimate success should the claim be litigated.” Prot. Comm. for Indep. Stockholders of TMT Trailer Ferry, Inc., 390 U.S. at 424.  The court must also recognize

“that  since the very purpose of a compromise is  to avoid the trial  of  sharply disputed issues and to dispense with wasteful  ligation,  the court  must  not  turn the

settlement hearing into a trial or a rehearsal of a trial.”  Newman v. Stein, 464 F.2d 689, 692 (2d Cir. 1972) (quotation marks omitted).

Courts in this jurisdiction typically consider the following factors in determining whether a compromise should be approved: (i) the probability of success

in litigation, with due

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consideration for the uncertainty in fact and law; (ii) the difficulties, if any, to be encountered in the matter of collecting any litigated judgment; (iii) the complexity

and likely duration of the litigation and any attendant expense, inconvenience, and delay; and (iv) the paramount interest of the creditors and the proper deference

to their reasonable views in the premises.  See In re Woodson, 839 F.2d at 620 (quoting A&C Props., 784 F.2d at 1380).  It is not necessary that the conclusions

reached in the consideration of each of the above factors support the settlement, but taken as a whole, the conclusions must favor the approval of the settlement.

See In re Pac. Gas & Elec. Co., 304 B.R. 395, 417 (Bankr. N.D. Cal. 2004) (citing In re WCI Cable, Inc., 282 B.R. 457, 473-74 (Bankr. D. Or. 2002)).

The standard for approval of compromises under Bankruptcy Rule 9019 is deferential to the debtor’s judgment and merely requires the Court to ensure

that the compromise does not fall below the lowest point in the range of reasonableness in terms of benefits to the estate.  See City Sanitation v. Allied Waste Servs.

of Mass., LLC (In re Am. Cartage, Inc.),  656 F.3d 82, 91-92 (1st  Cir.  2011) (“The task of both the bankruptcy court  and any reviewing court  is  to canvass the

issues and see whether the [compromise] falls below the lowest point in the range of reasonableness . . .  If a trustee chooses to accept a less munificent sum for a

good reason (say, to avoid potentially costly litigation), his judgment is entitled to some deference.”) (citing In re Thompson, 965 F.2d 1136, 1145 (1st Cir. 1992));

Nellis, 165 B.R. at 123 (a court need not be aware of or decide the particulars of each individual claim resolved by the compromise or “assess the minutia of each

and every claim”; rather, a court “need only canvass the issues and see whether the [compromise] falls ‘below the lowest point in the range of reasonableness.’”);

see also In re Pac. Gas & Elec. Co., 304 B.R. at 417; In re Planned Protective Servs., Inc., 130 B.R. 94, 99 n.7 (Bankr. C.D. Cal. 1991) (same).

While a court must “evaluate . . . all . . . factors relevant to a fair and full assessment of the wisdom of the proposed compromise,” Anderson, 390 U.S. at

424-25, a court need not conduct a “mini-trial” of the merits of the claims being settled, Port O'Call Invest. Co. v. Blair (In re Blair), 538 F.2d 849, 851-52 (9th

Cir. 1976), or conduct a full independent investigation. Drexel Burnham Lambert Grp., 134 B.R. at 505.  As one court explained in assessing a global settlement of

claims,

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“[t]he appropriate inquiry is whether the Settlement Agreement in its entirety is appropriate for the . . . estate.” Air Line Pilots Ass'n, Int'l v. Am. Nat'l Bank & Trust

Co. (In re Ionosphere Clubs, Inc.), 156 B.R. 414, 430 (S.D.N.Y. 1993), aff’d 17 F.3d 600 (2d Cir. 1993) (emphasis added).

As demonstrated above, the Case Resolution Contingency Process is fair and reasonable and in the best interests of the Debtors, their estates, all of their

economic stakeholders,  and should be approved.    As stated,  approval  of  the Case Resolution Contingency Process  (together  with the filing of  the Debtors’  OII

Proposals) will eliminate the costs, potential litigation, and risks associated with the issues raised in the December 13 Letter, including the potential litigation that

would  arise  from  an  attempted  state  takeover  of  the  Utility.  Such  issues  are  complex,  time  consuming,  and  involve  uncertain  areas  of  state  and  federal  law,

including thorny issues of “just compensation” that would arise if the state attempted to acquire the Debtors by exercise of eminent domain.  Cal. Const. Art. I,

§  19  (c).    Elimination  of  the  risk  and  uncertainty  of  that  potential  litigation  will,  among  other  things,  expedite  distributions  to  fire  victims.    Courts  routinely

acknowledge  that  uncertainty  of  litigation  and  federal  policy  weigh  in  favor  of  approval  of  settlements.    See In re Laser Realty, Inc. v. Fernandez (In re

Fernandez), 2009 Bankr. LEXIS 2849, at *9-10 (Bankr. D.P.R. Mar. 31, 2009) (“The Court concluded that the uncertainty of the litigation between the debtors and

Citibank  weighs  heavily  in  favor  of  the  approval  of  the  Settlement  Agreement.”);  In re Manuel Mediavilla, Inc.,  568  B.R.  551,  567  (B.A.P.  1st  Cir.  2017)

(recognizing “federal  policy encouraging settlement  of  bankruptcy litigation.”).    Further,  approval  of  the Case Resolution Contingency Process  should promote

expedited distributions to fire victims.

VI. CONCLUSION

The Case Resolution Contingency Process is supported by the Debtors, the Shareholder Proponents, and the Governor’s Office.  Approval will expedite

the successful conclusion of these Chapter 11 Cases within the timeframe established by AB 1054.  Based on the foregoing, the Debtors respectfully request that

the Court approve the Case Resolution Contingency Process as such action is a reasonable exercise of the Debtors’ business judgment and is supported by valid

business justifications.

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VII. NOTICE

Notice of this Motion will be provided to (i) the Office of the United States Trustee for Region 17 (Attn: Andrew Vara, Esq. and Timothy Laffredi, Esq.);

(ii)  counsel to the Creditors Committee;  (iii)  counsel to the Tort Claimants Committee;  (iv) the Securities and Exchange Commission; (v) the Internal  Revenue

Service;  (vi)  the  Office  of  the  California  Attorney  General;  (vii)  the  CPUC;  (viii)  the  Nuclear  Regulatory  Commission;  (ix)  the  Federal  Energy  Regulatory

Commission; (x) the Office of the United States Attorney for the Northern District of California; (xi) counsel for the agent under the Debtors’ debtor in possession

financing facility; (xii) the Governor's Office; (xiii) counsel for the Shareholder Proponents; and (xiv) those persons who have formally appeared in these Chapter

11 Cases and requested service pursuant to Bankruptcy Rule 2002. The Debtors respectfully submit that no further notice is required.

No previous request for relief sought herein has been made by the Debtors to this or any other court.

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WHEREFORE the  Debtors  respectfully  request  entry  of  an  order  granting  (i)  the  relief  requested  herein  as  a  sound  exercise  of  the  Debtors’  business

judgment,  appropriate  under  section  363(b)  and  105(a)  of  the  Bankruptcy  Code  and  Bankruptcy  Rule  9019,  and  in  the  best  interests  of  their  estates,  creditors,

shareholders, and all other parties in interest, and (ii) the Debtors such other and further relief as the Court may deem just and appropriate.

Dated:  March 20, 2020  WEIL, GOTSHAL & MANGES LLPCRAVATH, SWAINE & MOORE LLPKELLER BENVENUTTI KIM LLP

 

       By: /s/ Stephen Karotkin  

    Stephen Karotkin            Attorneys for Debtors and Debtors in Possession         

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EXHIBIT A

Case Resolution Contingency Process

1. Failure to Meet Required Dates

Required Dates. The Required Dates Approval Order (as defined below) shall include a requirement that the Confirmation Order1 be entered byJune 30, 2020 (the “Confirmation Order Required Date”). The Required Dates Approval Order shall also provide that neither of the following shallconstitute a failure to meet the Confirmation Order Required Date: (i) the Confirmation Order contains conditions subsequent related to the entry of,appeal of, or compliance with the CPUC's decision in the PG&E Bankruptcy OII or (ii) the pendency of any appeal, motion for reconsideration orsimilar relief of the Confirmation Order.

In the event the Confirmation Order Required Date does not occur on or prior to June 30, 2020:

◾ The Debtors shall be authorized and directed, no later than ten business days after the Confirmation Order Required Date has not beenmet, to appoint a Chief Transition Officer as described below.

◾ The Debtors and the Governor’s Office shall agree to (or, if no such agreement is reached, the Bankruptcy Court shall order pursuant to theprocess set forth below) a form of bidding procedures (as ordered by the Bankruptcy Court, the “Bidding Procedures”). The BiddingProcedures shall include, among other things, the following:

◾ Provisions authorizing and directing the Debtors to conduct the Sale Process (defined below).

◾ A schedule that allows for the closing of a sale (or effective date of a plan) no later than September 30, 2021.

◾ Provisions that allow the state of California or a bidder supported by the state of California to participate as a bidder in the process.

◾ Customary confidentiality and non-disclosure provisions applicable to all bidders or potential bidders participating in the process.

◾ Provisions that prohibit extension or modification of any dates set forth in the Bidding Procedures to the extent such extensions ormodifications would result in a process being unable to be completed by September 30, 2021 or would limit the ability of a biddersupported by the state of California to participate as a bidder in the process, without such extension or modification beingconsented to by the Governor’s Office or approved by the Bankruptcy Court; provided, that in the event such a modification orextension is ordered without the consent of the Governor’s Office, exclusivity shall be immediately terminated without further orderof the Bankruptcy Court for the state of California, or a party supported by the state of California to sponsor a plan for either or bothDebtors.

◾ Provisions that permit the Debtors’ boards of directors to exercise their fiduciary duties under applicable law in connection with theSale Process; provided, that (i) the Debtors shall not terminate the Sale Process without the consent of the Governor’s Office orapproval of the Bankruptcy Court and (ii) in the event the Debtors terminate the Sale Process without the consent of theGovernor’s Office, exclusivity shall be immediately terminated without further order of the Bankruptcy Court for the state ofCalifornia or a party supported by the state of California to sponsor a plan for either or both Debtors.

◾ Provisions setting forth the responsibilities of the Sale Committee(s) (defined below).

◾ Provisions setting forth qualification requirements for bidders, which shall permit the state of California or a party supported by thestate of California to qualify as a bidder.

• The Debtors shall be authorized and directed to commence the Sale Process in accordance with the Bidding Procedures.

• The Chief Transition Officer shall remain in place until the completion of the Sale Process.

The Plan Commitments Approval Order and the Confirmation Order shall provide that the Effective Date of the Plan shall occur by September 30,2020 subject to the following:

• If the Effective Date has not occurred by September 30, 2020, the Debtors shall be authorized and directed, no later than ten business daysafter such date, to appoint a Chief Transition Officer as described below to the extent not already appointed.

• The Chief Transition Officer shall remain in place until the earlier of (a) completion of the Sale Process, if a Sale Process is required, or (b)the Effective Date of a Plan.

• If the Chief Transition Officer is appointed as required above, then the deadline for the Effective Date shall be extended to December 31,2020 (the “Effective Date Required Date”). If (i) the Chief Transition Officer is not appointed or retained as required above or (ii) theEffective Date has not occurred by the Effective Date Required Date, then the Debtors shall pursue a Sale Process in accordance with theBidding Procedures.

Chief Transition Officer.

• When a Chief Transition Officer is required to be appointed pursuant to the terms hereof, the Debtors shall select the Operational Observer(defined below) as the Chief Transition Officer, or, if the Operational Observer is not available or able to take on the role, another individual

or firm from the following list of candidates: [NAMES].2

• The Chief Transition Officer shall have the authority and scope of responsibility set forth on Annex A.

• If the Chief Transition Officer is replaced, the subsequent Chief Transition Officer must also be selected from the list of candidates set forthin this section.

Sale Process.

• No later than ten business days after the date on which a Sale Process is required to be pursued pursuant to the terms hereof, the Debtorsshall be authorized and directed to appoint a sale committee (the “Sale Committee”) of the board of directors of PG&E Corp. (and, to theextent necessary, to appoint a similar committee with the same members and scope of the Utility). The members of such Sale Committee(s)shall be selected by the Debtors’ boards of directors and be acceptable to the Governor’s Office. The Sale Committee(s) shall oversee theSale Process and make recommendations to the full boards of directors regarding the Sale Process.

• The Debtors shall appoint a Chief Restructuring Officer to manage the Sale Process and report to the Sale Committee. The Debtors’ currentChief Restructuring Officer shall fulfill that function; provided, that if the Debtors’ current Chief Restructuring Officer is not available to fulfillsuch function, the Sale Committee shall select a nationally recognized replacement with similar characteristics and experience to fulfill suchfunction.

• If a Sale Process is required, the Debtors shall be authorized and directed to implement the Sale Process in a manner consistent with theBidding Procedures and on the timeframes set forth therein and subject to the terms hereof.

• Unless the Governor’s Office otherwise agrees, the Debtors shall be authorized and directed, no later than ten business days after the laterof (i) the date on which a Sale Process is required to be pursued pursuant to the terms hereof, and (ii) the date of entry of the BiddingProcedures, to file a motion (the “Sale Motion”) with the Bankruptcy Court proposing a sale process that contains provisions allowingqualified bidders to bid for either a purchase of substantially all of the assets or a plan sponsorship proposal that would result in the plansponsor owning the equity of the Reorganized Debtors or the Reorganized Utility and is consistent with the Bidding Procedures andotherwise in form and substance acceptable to the Governor’s Office, the Sale Committee(s), and the Board(s) (the “Sale Process”).

• The Sale Process shall be conducted in accordance with the Bankruptcy Code and the California Public Utilities Code.

The Debtors shall be authorized and directed to do the following:

• Take all actions necessary to implement this requirement as soon as possible.

• Take all actions necessary to prepare for the Sale Process so that the Sale Process, if required hereunder, can be implemented as and onthe timeframes set forth herein.

Operational Observer.

The Required Dates Approval Order shall provide that, upon entry of such Order, the state of California can select an operational observer (the“Operational Observer”).3 The Operational Observer shall have the right to observe the Debtors’ compliance and progress with respect to naturalgas operations and safety and wildfire and other disaster mitigation activities including: vegetation management programs; system hardeningprograms (both electrical infrastructure and microgrid implementation); risk analysis; implementation of mitigation measures (including the use andeffectiveness of the emergency operations center and PSPS); public and workforce safety; and programs to assure compliance with any applicablesafety and operational metrics. The Operational Observer shall have the authority to observe meetings of the boards of directors (includingcommittee meetings) and management meetings related to performance and safety issues, conduct field visits, interviews and inspections, reviewdocumentation related to safety performance, and undertake any other tasks reasonably required in furtherance of its duties.4 The OperationalObserver shall provide periodic reports to the Utility CEO, the Debtors’ boards of directors and the Governor’s Office. The Operational Observershall not divulge confidential or proprietary information of the Debtors without the Debtors’ consent; provided, that the Debtors shall be deemed tohave consented to the disclosure of such information to the Governor’s Office and its advisors. The Operational Observer shall keep a record ofinformation shared with the Governor’s Office and shall make such information available to the Debtors.

Required Dates Approval Motion

On or prior to March 20, 2020, the Debtors shall file a motion seeking approval of the foregoing procedure, which motion and related form of ordershall be in form and substance acceptable to the Governor’s Office (the “Required Dates Approval Motion”). The Debtors shall request expeditedhearing of the Required Dates Approval Motion on a schedule acceptable to the Governor’s Office. The Order approving the Required DatesApproval Motion, which shall be in form and substance acceptable to the Governor’s Office, shall be referred to as the “Required Dates ApprovalOrder”.

1 “Confirmation Order” means an order of the Bankruptcy Court on the docket confirming the Plan in form and substance acceptable to theGovernor’s Office; provided, that if the Bankruptcy Court declines to enter a form of Confirmation Order unless the Debtors modify the ConfirmationOrder in a manner not acceptable the Governor’s Office, the Debtors may modify the Confirmation Order to address the Bankruptcy Court’srequirements.2 The Governor’s Office has proposed two names. The Debtors will diligence those names and revert with any questions or concerns.3 Consider naming the Operational Observer in the document.4 The Reorganized Debtors may limit the Operational Observer’s attendance at meetings or access to information based on a claim of privilege onlyif, in the opinion of counsel, such restriction is necessary to preserve the privilege.

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ANNEX A

SCOPE OF CHIEF TRANSITION OFFICER

The Chief Transition Officer shall report to the Utility CEO and shall provide updates to the SNO Committees (as applicable) and the Debtors’boards of directors with regard to safety and operational matters.

Subject to the direction and oversight as set forth above, the Chief Transition Officer’s scope of responsibility shall include the following:

1. Responsibility for overseeing, and managing to the extent necessary, PG&E’s progress respect to vegetation management programs,system hardening programs (both electrical infrastructure and microgrid implementation), risk analysis, and other issues that impact publicsafety.

2. Monitoring the use of the Emergency Operations Center and PSPS.

3. Responsibility for overseeing, and managing to the extent necessary, financial reporting related to issues that impact public safety and thepublic interest.

4. Interfacing with the CRO and the CSO.

5. Responsibility for overseeing, and managing to the extent necessary, PG&E’s progress toward and compliance with its Safety andOperational Metrics (to the extent the CPUC has approved such Metrics or PG&E has adopted or proposed such Metrics).

6. Providing periodic (and no less than monthly) reporting to the CPUC.

The Chief Transition Officer’s authority does not alter the authority, responsibility, or accountability of other members of management except to theextent of the scope specifically delegated to the Chief Transition Officer. Notwithstanding the foregoing, the Chief Transition Officer shall not beauthorized to dispose of the assets, business or stock of the Debtors. The Chief Transition Officer shall not divulge confidential or proprietaryinformation of the Debtors without the Debtors’ consent; provided, that the Debtors shall be deemed to have consented to the disclosure of suchinformation to the Governor’s Office and its advisors. The Chief Transition Officer shall keep a record of information shared with the Governor’sOffice and shall make such information available to the Debtors.

EXHIBIT B

[PROPOSED] Order