PG&E Corporation v. Abrams

Background

PG&E Corporation and Pacific Gas and Electric Company, identified as the debtors, entered into a Restructuring Support Agreement with the Official Committee of Tort Claimants. They asked the Bankruptcy Court to approve that agreement. The agreement supported a bankruptcy plan creating a $13.5 billion Fire Victim Trust to pay claims by fire victims, including William B. Abrams.

Abrams objected to approval. He argued that the agreement eliminated a court trial concerning the Tubbs Fire, shared the settlement with government agencies, and did not address corporate governance or future wildfire risks and climate-change adaptation. The Bankruptcy Court found those arguments irrelevant to whether the agreement should be approved and granted the request on December 19, 2019.

Abrams then sought reconsideration. He argued, based in part on an informal survey, that tort claimants had not been adequately informed about important provisions of the agreement and had not told their attorneys that they supported the plan. The Bankruptcy Court denied reconsideration on February 12, 2020. Abrams then filed a notice of appeal and asked the district court for permission to appeal.

Legal standard

The district court explained that permission to appeal an interlocutory order—an order issued before the litigation is fully finished—is generally reserved for exceptional circumstances. The party seeking permission must identify a controlling legal question, show substantial grounds for disagreement about that question, and show that an immediate appeal could materially advance the end of the litigation.

Discussion

The court held that Abrams did not identify a controlling legal question. He did not challenge the legal standard the Bankruptcy Court used to approve the agreement or deny reconsideration. Instead, his main argument was that the agreement was not a valid and sound exercise of the debtors’ business judgment and was not in the best interests of tort claimants. The court characterized whether the agreement reflected sound business judgment as a factual question rather than a controlling legal question. It therefore found no basis for granting permission to appeal on that ground.

The court also held that Abrams had not sought a stay pending appeal. Bankruptcy Rule 8007 generally requires a party seeking to pause the effect of a bankruptcy order during an appeal to first ask the Bankruptcy Court for that relief, unless the party justifies not doing so. Abrams did not seek a stay from either the Bankruptcy Court or the district court.

The Bankruptcy Court had confirmed the plan on June 20, 2020, and the plan became effective on July 1, 2020. The district court reasoned that undoing the restructuring agreement would not undo the confirmed plan or the creditors’ votes. Because the plan had superseded the agreement, and because Abrams had not sought a stay, the court concluded that the appeal was moot—meaning the court could no longer provide effective relief through that appeal.

Disposition

Judge Haywood S. Gilliam, Jr. denied the Motion for Leave. The clerk was directed to close the appeal and terminate the case.