PG&E Bankruptcy: Act Now or Lose Your Rights

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PG&E filed for voluntary chapter 11 bankruptcy on January 29, 2019 as lawsuits piled up in California courts in the devastating aftermath of at least 245,000 acres burned, 43 people dead, and nearly 9,000 structures completely destroyed. Many residents and businesses are still looking for answers.

winelosses-warningUnfortunately, the bankruptcy will not wait while people get their lives and businesses back on track. The bankruptcy court just announced a “bar date.” No further claims may be included in the proceeding or compensated if filed after October 21, 2019. This time period is shorter than the statute of limitations that might otherwise apply in the civil court. That means you need a lawyer NOW. Call the professionals at Andrews & Thornton to ensure you receive full and fair compensation.

The Underlying Litigation

People and businesses with losses due to the October 2017 wildfires began filing lawsuits immediately in the aftermath of the fires. All of the lawsuits were coordinated under a single mass tort action (called the “California North Bay Fire Cases”) in San Francisco Superior Court. Sean Higgins, a partner at Andrews & Thornton, was appointed by the court to the Plaintiffs’ Steering Committee. The leadership of the North Bay Fire Cases had the monumental task of proving that PG&E’s equipment started all of the 2017 fires:

  • Atlas Fire (Napa and Solano Counties)
  • Cascade Fire (Yuba County)
  • Cherokee Fire (Butte County)
  • Highway 37 Fire (Sonoma County)
  • Honey Fire (Butte County)
  • La Porte Fire (Butte County)
  • Lobo Fire (Nevada County)
  • Nuns Fire (Napa and Sonoma Counties)
  • Pocket Fire (Sonoma County)
  • Redwood Valley/Potter Fire (Mendocino County)
  • Sulphur Fire (Lake County)
  • Tubbs Fire (Sonoma and Napa Counties)

The parties spent a year exchanging thousands of documents and taking dozens of depositions. PG&E attempted to get thousands of lawsuits, which were based on inverse condemnation, dismissed. Inverse condemnation is a right protected by California law. It requires public entities to pay for property that they take or damage for a public use. California courts have repeatedly held that a privately-owned utility is a monopolistic or quasi-monopolistic authority with an exclusive franchise from the state that permits the application of inverse condemnation to individuals claiming property loss or damage caused by the utility. In other words, the doctrine of inverse condemnation protects property owners by requiring utilities whose equipment causes fires to pay when those fires destroy property, regardless of whether the utility acted reasonably. The court in the North Bay Fire Cases agreed with long-standing California law and held that PG&E would be liable for all property loss caused by their equipment.

Throughout the Summer and Fall of 2018, the parties were developing the cause and origin of all of the 2017 fires. They were also preparing for trial in 2019 on a bellwether group of cases suffering property loss or injury from the Atlas fire.

In late January 2019, when PG&E filed for Chapter 11 bankruptcy, the North Bay Fire Cases came to a screeching halt. By virtue of the automatic stay provisions contained in the federal Bankruptcy Code the state civil cases were stayed during the pendency of the bankruptcy. As such, the North Bay Fire Cases have been stayed since January 2019.

The Bankruptcy

The Chapter 11 bankruptcy of PG&E has put tremendous pressure on the parties to quickly develop a plan for reorganization. This is one of the largest bankruptcies in California history. Since PG&E represents the largest utility in the state there have been multiple interests, such as both federal and state regulatory agencies, rate payers, bondholders, trade creditors, tort victims, and subrogation interests, all competing for their voice to be heard. There are too many battles in and complexities to the bankruptcy to attempt to summarize them all here but we will attempt to cover some of the bigger issues.

Bar Date and Proof of Claim

The various interests in the bankruptcy fought hard to determine when a bar date would be set. A bar date is a deadline ordered by the bankruptcy court for all creditors to file claims establishing their right to compensation. PG&E argued for a date in September 2019 while the official Tort Claimants’ Committee (TCC) argued for a date after the holidays, in late January 2020. Ultimately, over the TCC’s objection, the court ordered a bar date of October 21, 2019. That means any creditors, regardless of the circumstances of their loss and even if they filed a civil lawsuit in the North Bay Fire Cases, must file a proof of claim by October 21, 2019 or be barred from litigating their claim against PG&E at any future date.

A proof of claim is a court-ordered document that summarizes the nature and extent of any creditor’s claim as well as the basis for the claim. All claims are kept in a register maintained by the debtor, who then analyzes the claims to determine the total amount of claims asserted against the bankrupt estate. The debtor may challenge or object to individual claims, though typically they request formal discovery from the creditor as to the extent, nature or basis of their claim. If the debtor formally objects to the claim, the court will rule whether or not to allow the claim to proceed. This is a highly technical process and you need the advice of an expert at navigating tort claims through a bankruptcy to help you prepare and file your claim, fight PG&E if they object to the claim and otherwise ensure you receive full and fair compensation for your losses. Andrews & Thornton is the firm for you. Anne Andrews has chaired or sat on numerous creditors’ committees in bankruptcy proceedings. She has helped marshal hundreds of millions of dollars for tort victims. We can help you figure out your total loss, prepare your proof of claim, hire any experts as necessary to support your claim and otherwise make sure that your claim is sound and permitted to proceed in the bankruptcy. Now is not the time to do it yourself. Call us today.

Emergency Wildfire Fund

Through the negotiation of the TCC and PG&E, the court has approved and ordered the debtors to establish an Emergency Wildfire Fund. The purpose of the Fund is to provide emergency assistance to individuals and businesses affected by the 2017 wildfires. It is primarily designed to address individuals who have exhausted their insurance benefits for alternative housing arrangements, those who did not have insurance or anyone else who is experiencing homelessness as a result of the 2017 wildfires. The Fund is $100 million and is expected to provide access to money this year. The details of the Fund, including how and when to make an application, will be announced in the coming weeks. Andrews & Thornton can assist you in applying for emergency funds. We are actively involved in the process being developed and can walk you through the process.

Legislation

The governor convened a panel of experts shortly after the bankruptcy was filed to come up with a plan to address some of the issues involved in the bankruptcy, as well as those that could not be solved by the bankruptcy alone. For example, what are California’s utilities going to do if there is another catastrophic fire in 2019? Or 2020? Does the threat of future wildfires put PG&E, Edison and SDG&E at risk of future bankruptcy? How do we stop the utilities from recklessly endangering the lives of Californians? Ultimately, a heavily-negotiated bill was passed in early July 2019 that provides for a wildfire fund to deal with future wildfires. The fund will be financed by a continuing charge to ratepayers and/or additional capital contributed by shareholders of the utilities. The legislation helps ensure the long-term viability of California’s energy sector. It imposes far stricter wildfire prevention efforts from each of the utilities. Most importantly for those affected by the 2017 wildfires, it requires PG&E to exit bankruptcy quickly, by June 2020, to take advantage of one of the wildfire funds.

This is all the more reason you need a lawyer now! The bankruptcy is moving rapidly and you need someone actively involved and experienced in bankruptcy to help you get the compensation you deserve.

If you or a loved one was injured, suffered business or property loss, or suffered the loss of a loved one from any of the 2017 wildfires, contact our office immediately at (949) 748-1000 or via email at: info@andrewsthornton.com to speak with an experienced attorney.

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