By Hudson Sangree

A lawyer who filed a $30 billion plan by bondholders to bump PG&E Corp. out of bankruptcy urged the utility and the U.S. Bankruptcy Court on Wednesday to move the process along.

“We believe this case more than anything else needs a greater sense of urgency, a greater sense of transparency … and a greater sense of cooperation,” attorney Michael Stamer told Judge Dennis Montali in San Francisco.

Stamer and other lawyers with the firm Akin Gump Strauss Hauer & Feld filed a motion Tuesday to end PG&E’s exclusivity period — the time the company has to file its Chapter 11 reorganization plan without competing proposals. They represent the ad hoc committee of senior unsecured noteholders in PG&E’s massive bankruptcy case.

Stamer told the judge that the unsecured creditors hold $10 billion in PG&E notes. The bonds would take a backseat to secured debts in the bankruptcy proceeding, and the noteholders stand to lose if PG&E can’t meet its obligations.

PG&E has until September to come up with its own reorganization plan. In May, Montali extended the 120-day statutory period under which PG&E and its utility subsidiary Pacific Gas and Electric had to file their proposal. (See PG&E Gets More Time to File Bankruptcy Plan.)

The companies sought bankruptcy protection Jan. 29, citing at least $30 billion in liabilities for a series of devastating wildfires sparked by their equipment. The blazes included November’s Camp Fire, the deadliest in state history.

Wednesday’s hearing was meant to establish a procedure for PG&E to notify fire victims about its bankruptcy and to set a “bar date,” a deadline for victims to file claims with the court. After four hours of argument, Montali approved PG&E’s plan for running notices online, in TV ads and in publications such as People.

He set Oct. 21 as the bar date, following PG&E’s recommendation.

Stamer appeared before the judge ostensibly to endorse PG&E’s proposed deadline but quickly segued into talking about the motion to end exclusivity he’d filed the day before.

A term sheet attached to the motion lays out a plan for creditors to invest up to $30 billion in PG&E in exchange for common stock and $16 billion to compensate fire victims.

The lawyer said PG&E’s bankruptcy has a “political element that’s hard to wrap your head around.” The investment plan is structured to appeal to elected officials and residents, he said, because it wouldn’t raise rates and avoids a government bailout.

“We have made the investment attractive to politicians and the people who elected them” by letting investors bail out PG&E and not “putting it on the backs of ratepayers,” Stamer said.

Newsom Plan

On Friday, California Gov. Gavin Newsom proposed a $21 billion fund to cover future wildfire costs, with ratepayers and utilities each paying half. Newsom wants to extend a $2.50 service charge that utility customers have been paying since the early 2000s but that’s set to expire next year.

The governor’s plan also calls for the state’s three large investor-owned utilities — PG&E, Southern California Edison and San Diego Gas & Electric — to spend $3 billion on safety measures and for PG&E to exit bankruptcy by June 2020 to access the wildfire recovery fund.

PG&E and other IOUs would still be on the hook for the catastrophic fires of 2017 and 2018. California imposes a strict liability standard, known as inverse condemnation, on utilities whose equipment starts fires.

Newsom called on lawmakers to introduce a bill of his plan as soon as this week and to pass it by July 12, the day before the legislature’s summer recess starts. Whether lawmakers will pass a measure that may be unpopular with voters, especially with anger toward PG&E and other IOUs running high, remains uncertain.

As Stamer continued talking, Montali reminded him that Wednesday’s hearing was not about the motion to end exclusivity. That motion is scheduled to be heard July 23.

The judge also reminded PG&E’s lead bankruptcy attorney, Stephen Karotkin, of the same point when Karotkin began to oppose Stamer’s motion.

“In their plan, he complains about nothing being resolved,” Karotkin said. “The only settlement in their so-called plan is the settlement we reached with the public entities.” PG&E recently announced it had agreed to pay cities, counties and public agencies $1 billion to settle claims arising from wildfires in 2015, 2017 and 2018.

“We’re not arguing the exclusivity motion,” the judge said, cutting him off.