The judge overseeing PG&E's ongoing bankruptcy case said Monday that an attorney representing thousands of Northern California fire survivors properly disclosed a potential conflict of interest to his clients.
The finding was laid out in an order by U.S. Bankruptcy Judge Dennis Montali, who had previously indicated he would deny efforts by critics of attorney Mikal Watts to use the potential conflict to disqualify votes by Watts' clients on a massive, multi-billion-dollar settlement with PG&E. The six-week vote by fire survivors with claims against PG&E — a group comprised of about 70,000 people – ended on Friday. Watts represents 16,000 of those fire survivors.
PG&E is racing to have its bankruptcy plan confirmed by June 30 so that it can tap a state-mandated wildfire insurance fund in time for the peak of the 2020 fire season. But for PG&E's bankruptcy plan to move forward, two-thirds of the fire survivors who vote on the settlement deal must must approve it.
Scrutiny into Watts and his firm, Watts Guerra, was spearheaded by Tubbs Fire survivor William Abrams and was joined by various other fire survivors and their lawyers. The group argued Watts failed to properly disclose that his line of credit had been partly funded by Apollo Global Management and Centerbridge Partners.
Those two private equity groups are among the groups of Wall Street heavyweights that have been negotiating against each other – and fire survivors – in the PG&E bankruptcy. Watts said the arrangement was made through a broker, and that he learned of it afterwards.