Following the North Bay and Paradise/Butte County wildfires in 2017 and 2018, PG&E Corporation filed for Chapter 11 bankruptcy protection. Our Wildfire Litigation team, headed by partners Michael A. Kelly and Khaldoun Baghdadi, have led the fight to hold PG&E responsible for the damage it caused since October 9, 2017. They were lead and liaison counsel respectively in the JCCP Coordinated Litigation that began in November 2017, and later served as counsel to members of the Tort Claim Creditors Committee in the bankruptcy. They presently serve on the Trust Oversight Committee established at the time of PG&E’s exit from bankruptcy.
PG&E’s Plan of Reorganization under Chapter 11 was confirmed by the Bankruptcy Court on June 20, 2020. The Fire Victim Trust is tasked with evaluating, administering, processing and resolving more than 70,000 claims under the direction of the Trustee, the Honorable John K. Trotter, Jr. (Ret.).
The Claims Resolution Procedures outline seven types of claims that fire victims may submit: (1) Real Property, (2) Personal Property, (3) Personal Income Loss, (4) Business Loss, (5) Other Out-of-Pocket Expenses, (6) Wrongful Death and Personal Injury, and (7) Emotional Distress.
The Trust is funded 50% through cash and 50% through shares in the reorganized PG&E. This fact has resulted in some uncertainty as to when full funding will be achieved, but it will not prevent the Trust from beginning to pay first installments on approved and accepted claim awards beginning on and after March 15, 2021. Trustee John Trotter has said that it is his hope that victims will get everything they’re owed. Currently managing $6 billion in cash, the Trustee and his advisors have developed a careful ‘sell-down plan’ waiting for the share price to rise and stabilize before selling shares.
The payment process has required analyzing tens of thousands of claim questionnaires, with less than 50% of claims having been verified and completed as of February 15. Nonetheless, on February 15, the Trust began notifying victims with completed deficiency-free questionnaires how much their claims were valued at, with the intention of rolling out partial claim payments beginning March 15, 2021 for accepted claims where the victim forgoes further appeals or litigation. The pro rata amount to be paid has not been determined as we go to press. According to bankruptcy law, all victims must be treated the same with each receiving the same flat percentage.
The Trust kick-started the payment process in the fall of 2020 by creating a preliminary compensation program to give survivors as much as $25,000 before their full claims were processed. At the time that plan was initiated with the Trust, administrators said they were not aware of any other bankruptcy case that had implemented such an early payment program.
While the journey for victims is far from over, there is finally a glimmer of light at the end of the tunnel. Our Wildfire Litigation team has stayed focused on the rights of our clients since the first of these fires ignited in the fall of 2017. We will not rest until each of our clients has received the maximum amount due them under the Trust’s rules and procedures.