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
together with 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 caption In 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, certain funds and accounts managed or advised by Abrams Capital Management, L.P. (“Abrams”), and certain funds and accounts managed or advised by Knighthead Capital
Management, LLC (“Knighthead” and, together with Abrams, the “Shareholder Proponents”) filed the Debtors’ and Shareholder Proponents’ Joint Chapter 11 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 and through
the Butte County District Attorney’s office (the “People” and the “Butte DA,” respectively) to resolve the criminal prosecution of the Utility in connection with 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 in violation 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 to Cal. 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 the Bankruptcy 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&E Corporation 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 Agreement provides
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 also agreed to pay $500,000 to the Butte County District Attorney Environmental and Consumer Protection
Fund to reimburse costs spent on the investigation of the 2018 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
claims for 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 under the 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 with
individuals and public entities holding wildfire-related claims and the Plan. The Agreement also provides for the full and final satisfaction, release, and discharge of 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 Superior
Court, 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 not become 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 to
provide 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 separately consented to the Butte DA consulting, sharing information with and receiving information
from the monitor overseeing the Utility’s probation related to the San Bruno 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 approval of 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 filed
as Exhibit 10.1 hereto and incorporated herein by reference.