Ad Hoc Committee of Holders of Trade Claims v. PG&E Corporation

Background

PG&E Corporation and Pacific Gas and Electric Company began Chapter 11 bankruptcy cases on January 29, 2019. The debtors’ proposed plan treated allowed general unsecured claims as payable in full in cash and provided for postpetition interest—the interest accruing after the bankruptcy filing—at the federal judgment rate of 2.59%.

The Trade Committee argued that some claims should receive interest at contractual rates or, when no contractual rate applied, California’s statutory rate of 10%. On December 30, 2019, and again on February 6, 2020, the Bankruptcy Court ruled that the Ninth Circuit’s decision in In re Cardelucci controlled and that the federal judgment rate applied to postpetition interest on unsecured claims under the proposed Chapter 11 plan.

The Trade Committee moved in the district court for leave to appeal that ruling immediately. It sought an interlocutory appeal, meaning an appeal before the bankruptcy case and plan-confirmation process had ended.

Analysis

The district court first held that the Bankruptcy Court’s postpetition-interest memorandum and order were not final. In bankruptcy cases, an order is final when it conclusively fixes the parties’ rights or resolves a distinct proceeding. The district court reasoned that the proposed plan was likely to be amended, that the plan had not yet been confirmed, and that the interest issue remained part of the larger plan-confirmation process. The Trade Committee could raise its objections at the confirmation hearing and appeal an adverse confirmation order if one was entered.

The court then considered whether to permit an interlocutory appeal. Such permission requires a controlling legal question, substantial grounds for disagreement about the answer, and an immediate appeal that could materially advance the litigation.

The court found that the Trade Committee had not satisfied those requirements. It concluded that Cardelucci clearly controlled the question whether the federal judgment rate applied to postpetition interest in a solvent debtor case, including where the plan proposed to pay unsecured claims in full. The court rejected the Trade Committee’s arguments that Cardelucci was limited to impaired claims or conflicted with other cited authorities.

The court also found that an immediate appeal would not materially advance the bankruptcy cases. The postpetition-interest issue was only one part of the confirmation process, and an early appeal could produce piecemeal litigation and delay. The court noted that the debtors had indicated they would amend the plan if necessary to pay the rate ultimately determined to apply.

Disposition

The district court held that the Bankruptcy Court’s postpetition-interest memorandum and order were interlocutory rather than final and denied the Trade Committee’s motion for leave to appeal. Judge Haywood S. Gilliam, Jr. signed the order.