Fire Survivor Resigns in Protest From PG&E Bankruptcy Committee

One of the 11 members in the committee representing victims of PG&E-caused fires in the utility's bankruptcy proceedings has resigned in protest against the $13.5 billion half-stock settlement that's being offered to fire victims.

Kirk Trostle, who is a Camp Fire survivor, submitted his resignation letter to Assistant U.S. Trustee Timothy S. Laffredi on Tuesday.

"PG&E's reorganization plan is deeply flawed and very risky for all fire victims," wrote Trostle, a former chief of the Chico Police Department who lost his Paradise home in the 2018 Camp Fire. "The plan does not guarantee fire victims the aggregate of $13.5 billion in cash and stock compensation."

Trostle wrote he was resigning because he had been advised by lawyers for the committee that exercising his First Amendment right to speak out against the plan would conflict with his fiduciary duty as a member.

"I, as a [tort claimants committee] member, cannot encourage fire victims to vote against the plan without violating my fiduciary duties," Trostle wrote in the letter.

Attorneys for the committee maintain that members can speak freely.

The bankruptcy process has reached a turning point as the coronavirus pandemic wreaks havoc on financial markets. Half of the $13.5 billion settlement amount is slated to be paid into a trust as PG&E stock, which was already volatile even before the outbreak.

PG&E shares lost nearly half their value over the past month.

In a bankruptcy hearing Wednesday, Robert Julian, an attorney for the survivors' committee, told Judge Dennis Montali that survivors are demanding additional assurances that the $6.75 billion stock component of their deal will actually be worth that much when the bankruptcy plan is approved. Julian said the committee is in mediation with PG&E to resolve issues, including how quickly the trust can sell the stock, even as fire victims are slated to receive ballots and guidance on the multi-billion dollar settlement within days.

"This is happening in real-time — today," Julian told Montali. "This just happened in the last week. We need to let the victims know so they can decide."

Lawyers for PG&E say the current settlement with victims is the best way to get money to victims.

"Throughout this process, our focus has remained on getting victims paid fairly and as soon as possible, continuing to deliver safe and reliable electric and gas service, and implementing needed changes across our business to improve our operations for the long term," a PG&E spokesperson said in a statement.

Under their current deal, through their trust, PG&E fire victims will hold 21% of shares in the newly reorganized utility once it emerges from Chapter 11. The settlement was finalized in December, when markets were stable.

Fire victims will have until May 15 to vote on the plan.