FAQs about PG&E Bankruptcy
By Helen Sedwick
There's a lot of misinformation about the PG&E bankruptcy case out there, and there's a hard deadline approaching on Oct. 21. I am writing this as an attorney, but I am not looking for business. This is not the kind of legal work I do and will make no money from people making claims against PG&E. I am writing this as a community member who lost her home on Bennett Ridge.
October 21, 2019, is the deadline for submitting a Proof of Claim against PG&E relating to any fire before 2019. If you are still sitting on the fence about whether to make a claim, please take a moment to read the FAQs below.
Q: PG&E filed bankruptcy - doesn't that mean they are broke?
Not at all. PG&E is far from broke. It has assets in excess of $75 billion and $1.5 billion per year in net profit. It has the ability to borrow billions more.
PG&E did not escape liability by filing bankruptcy. After the fires, PG&E was facing thousands of lawsuits. Litigating thousands of claims individually would be unmanageable. Bankruptcy moved the cases to a different courtroom where claims can be managed in a more uniform and efficient manner.
Last time PG&E filed bankruptcy (2002), it ended up paying all claims in full. While PG&E might not pay claims in full this time around, experts expect wildfire victims will receive a high percentage of their claims.
Q: My home survived. Do I still have a claim?
Yes, you do. If you ran out the door in the middle of the night, drove through smoke and flames, were shut out of your home for weeks, only to return to a burned-out wasteland, you have a claim for emotional distress. And chances are you had damage to trees, landscaping, and other property that was not covered fully by insurance. If you were a renter, you lost personal property and were almost certainly underinsured. You have a claim.
Q: Won't PG&E employees and customers be hurt by all these fire claims?
PG&E employees and customers may be hurt more if too many fire survivors don't file claims.
A group of hedge fund managers and mega-banks is pushing a bankruptcy plan that would multiply their profits at the expense of individual fire survivors. Their plan would discount claims from the Tubbs Fire by 88 percent and all other fires by 43 percent while the hedge funds and banks would get paid in full. Their plan would also burden PG&E with more debt. If the hedge funds outvote other creditors, then fire survivors will suffer what is called a “cram-down” - the plan will be crammed down our throats. If history is any indication, the hedge funds will make huge profits at the expense of PG&E employees, customers, and wildfire survivors.
Q: Why bother? Won't my insurance company take all my recovery anyway?
No it won't, thanks to California's consumer-friendly laws. In this state, you will get paid first and in full before your insurance company gets a dime. And, you'll recover more than uninsured property losses. You are entitled to recover for the emotional distress of evacuation, living in a disaster zone, and/or rebuilding. Many of you had terrifying escapes. Add to that lost trees and landscaping. All this adds up to serious money.
Only after you recover in full will your insurance company receive payment for its “subrogation” claim against PG&E. Subrogation allows your insurance company to recover from PG&E amounts it paid to you for your losses. If you don't file a claim against PG&E, then your insurer steps into your place and recovers what should have been yours.
Q: What will it cost me to file a claim?
Nothing up front. Wildfire plaintiffs' attorneys are working on a contingency fee basis. You pay nothing during the process, not even the costs of investigation, expert witnesses, court filings, and appearances, etc.
Contingency attorneys are paid by receiving a percentage of your recovery. That percentage is negotiable. Some attorneys are charging 33 percent, even 40 percent. Others 20 to 25 percent. Personally, I don't see any justification for a contingency fee higher than 20 to 25 percent in this matter. High fees may be justified where the attorneys are taking on a large risk. But in this matter there isn't going to be a trial. The attorneys are not taking the risk of losing the case and getting nothing. Every one of their wildfire clients will get a payment from PG&E. And so will the attorneys. As I said, I don't see any reason to pay more than 20 to 25 percent.
Q: How long before we see any money?
Right now, it looks like mid-2020.
Q: How much work is involved in preparing a claim?
Not much. You will be asked to fill out a form called a Proof of Claim, which is fairly straight-forward. It must be filed by Oct. 21, 2019. If you are represented by an attorney, your attorney will fill out the form with you. Most of us have already completed 95 percent of the work.
Q: How do I decide which attorney to hire?
When I need a medical specialist, I ask my doctor friends for a referral. Same with attorneys. Ask your attorney contacts. Here's what I looked for:
o A firm with experience in mass tort litigation, especially where a bankruptcy is involved.
o A reasonable fee.
o Someone who communicates well and responds to my emails.
o Someone who is committed from start to finish. For instance, was the firm on a steering committee prior to bankruptcy? Are they on one of the bankruptcy committees? Do they have ties to the community? Have they even been to your neighborhood? I don't want to engage an attorney, and then find out my case has been handed off to a Texas or other out-of-town firm or to some over-worked associate who can't keep my name straight.
o Investment. Will the attorney be engaging an arborist, business advisor, and other experts to help me prepare and support my claim?
o Chemistry. Do I like this person? Do I want him or her on my team? Personally, I prefer the more corporate, intellectual-type. I cringe at flashy, celebrity and aggressive PI attorneys.
Q: I've been contacted by someone who wants to buy my claims against PG&E. I'd get the money right now. Should I take it?
It's a bad idea. You'll be selling your claims for a fraction of what you might get if you waited. I haven't seen these solicitation letters, but I bet they paint a gloomy picture of your chances of getting any payments from PG&E. I wouldn't believe them. They are trying to buy your claims for as little as possible. You will be better off hanging in there through the bankruptcy process.
Come learn more about how to protect your rights in the PG&E case. Bennett Valley Law and attorney Greg Skikos invite you to a Q&A session on Thursday, Aug. 22, 6:30-8:30 p.m. at the Kenwood Depot, 314 Warm Springs Road. I hope to see you then.
Helen Sedwick can be reached at Helen@bennettvalleylaw.com.