This week PG&E appeared in bankruptcy court to answer questions under oath put to it by wildfire survivors and other creditors. PG&E and its lawyers resisted answering some questions and, in one instance, outright refused to do so even after being directed to answer by the United States Bankruptcy Trustee. (So much for PG&E’s commitment to “transparency” during the bankruptcy process.)

One of the first questions put to PG&E was why it filed bankruptcy. Usually a company does so because it is insolvent. PG&E admitted, however, that it is not insolvent any sense. Its assets exceed its liabilities by many billions of dollars. Further, it was and is able to pay its obligations as they come due. Then why bankruptcy, if not to keep for PG&E’s shareholders money that should rightfully go to PG&E’s victims?

According to PG&E, there was no single event that forced a bankruptcy. Rather, the best PG&E could offer up as an explanation was a January 10 meeting it had with the CPUC. During that meeting, PG&E asked about the process for getting the CPUC’s approval to pass costs of North Bay wildfire settlements on to ratepayers, rather than paying settlements out of corporate profits. According to PG&E, the CPUC said it would not approve PG&E passing on to ratepayers the costs of settlements until after PG&E actually paid them, PG&E, apparently, didn’t like that answer. If PG&E paid the wildfire victims what they were due, and the CPUC thereafter decided not to allow PG&E to pass the costs on to ratepayers, PG&E felt that it might put the company in a difficult financial position.

Of course, PG&E has neither paid nor agreed to pay any North Bay fire victim a single penny. When it filed bankruptcy, such payments were months if not years off. So, the meeting with the CPUC does not explain PG&E’s big rush to file bankruptcy. It left many observers to conclude PG&E’s real purpose in filing bankruptcy was to try and use the bankruptcy process to stick it to victims.

We also asked PG&E about the Butte Wildfire it caused in 2015. PG&E had agreed to pay settlements to certain of the victims of that fire, with payments coming due in the days leading up to the bankruptcy filing. PG&E ultimately stiffed those victims, citing the need to “conserve cash.” But we now know that PG&E is not and was not insolvent.  It could have easily made those payments. In fact, while it was stiffing victims with its left hand, PG&E’s right hand had no problem coming up with $2.5 million to pay disgraced CEO Geisha Williams a severance bonus. We asked PG&E why and how it decided not to pay victims what they were due but to instead pay a bonus to the CEO at the helm when PG&E burned out so many of its customers. PG&E had no answer, promising to “get back to us” on that.

Because PG&E has not yet filed with the court all the financial information it is supposed to file, the questioning could not be completed and will resume on April 29.

When it filed bankruptcy, PG&E committed to pay its army of bankruptcy lawyers on a monthly basis many millions of dollars in fees.  Some of that money might better be directed to PG&E victims who have been homeless for years now, especially since PG&E swears in court that it filed it bankruptcy to serve the best interests of its victims.

Just how much will the bankruptcy lawyers take from the pot?  Hard to say exactly, but certainly more than $1 million per day.  Before all is said and done, fees are likely to total more than $750 million, perhaps a billion dollars.  Nice haul.

The last large utility to file bankruptcy was the Texas utility called Energy Future Holdings in 2104.  That bankruptcy yielded professional fees of more than $600 million.

But the Texas utility hadn’t hired PG&E’s New York lawyers, Weil Gotshal, who are among the world’s priciest.  Weil Gotshal’s partners — and there is an army of them — charge bankrupt companies over $1500 per hour. Weil Gotshal’s paralegals bill out at more than $400 per hour – more than the partners in many San Francisco law firms.  Heck, one of Weil Gotshal’s paralegals billed the Sears bankruptcy estate more than $170,000.  In one month.

Seems that PG&E has plenty of money for its lawyers.  If PG&E really cared about its victims, its hard to see why it couldn’t see its way clear to honor its promise a few weeks ago to throw a few dollars towards the victims of the 2015 Butte fire. After all, they lost everything and have been waiting more than three years to be paid.

PG&E told he bankruptcy judge today that its goal in bankruptcy is to establish a fund against which wildfire victims can make a claim.  Our Northern California Wildfire Lawyers explained why PG&E is not to be trusted.

Dario DeGhetaldi, Amanda Riddle, and Mike Danko explain why PG&E should be viewed with skepticism

 

Will Bonuses and Lawyers Take Money From Victims?
PG&E Gives VP a Raise Days Before Filing for Bankruptcy

PG&E asked Judge Curtis Karnow to send the various fire victims’ lawsuits to five different counties.  Instead, Judge Karnow decided that all cases that have been filed — or that will be filed — as a result of the Nor Cal fires will be handled by one judge and that judge will be in San Francisco.   Judge Karnow concluded that having one judge hear all the cases made the most sense because all the fire cases involve common issues.  Those issues include:  "PG&E’s policies and practices, including those regarding (a) the electrification of lines during high wind conditions, (b) the sorts of maintenance required of vegetation and of lines and poles; (c) training practices that apply to the multiple PG&E inspectors responsible for various types of maintenance."   

The question that remains is who the judge will be. That will be for the California Judicial Council to decide.  But if past fire cases are any indication, it is likely the cases will be assigned to the same judge who decided that they should be coordinated in the first place — in this case Judge Karnow.