Uncast ballots not an issue, PG&E bankruptcy judge says

SAN FRANCISCO -- More than 26,000 ballots from victims of historically destructive wildfires voting on whether to approve Pacific Gas & Electric Co.'s reorganization plan were not cast, an executive from the company processing the votes testified Wednesday.

While PG&E indicated victims overwhelmingly approved the proposal, Christina Pullo, Prime Clerk vice president of global corporate actions, said slightly more than half of all ballots favored the plan.

U.S. Bankruptcy Judge Dennis Montali appeared skeptical the issue would be an obstacle to confirmation.

"You don't vote for a president; you can't complain about who got elected," he quipped.

Montali is overseeing a multi-day bench trial scrutinizing PG&E's $57.65 billion plan to get out of bankruptcy.

For six weeks, wildfire victims cast ballots on the proposal that includes a $13.5 billion settlement. PG&E announced last week more than 85% voted to support it.

Prime Clerk was hired to solicit and count the ballots. Pullo supervised the effort.

During the Wednesday Zoom video conference, some victims questioned the integrity of the process. They have maintained the vote was biased in favor of passing the plan. They allege some plaintiffs' attorneys submitted votes for their clients. They said automated calls sought yes votes and that it was difficult for dissenting victims to vote.

Francis Scarpulla, who represents victims seeking roughly $100 million, was among those who have argued PG&E did not offer enough transparency. He asked how Prime Clerk ensured it eliminated duplicate ballots.

The company performed an analysis to get rid of votes for the same claim with the same voter identification, Pullo replied. Prime Clerk did not make any subjective decisions over exclusion since "we erred on the side of not disenfranchising any voter," she said.

Scarpulla pressed for more details on how many ballots were submitted, invalidated or not received.

Of 87,000 total ballots submitted to Prime Clerk, approximately 44,900 approved PG&E's reorganization plan while 5,100 voted against it, according to Pullo. About 10,100 others were excluded because they did not indicate a vote or were submitted late. Roughly 60,100 ballots were counted or invalidated, leaving an estimated 26,900 that were not submitted.

As Scarpulla was going to follow up on whether Pullo knows the total amount in damages victims are seeking in the claims, PG&E attorney Stephen Karotkin objected because the question had "no relevance with regard to the vote."

Montali agreed, explaining the only votes that matter are those that were cast.

"You've got to have a basic bankruptcy 101 lesson here," he said. "I've approved plans where one vote was submitted out of 100 creditors."

In an interview, Scarpulla said PG&E should be forced to reveal the total amount alleged in claims to ensure the $13.5 billion settlement wildfire victims agreed to would be enough. The utility "could be getting cents on the dollar," he said.

Scarpulla said he was not surprised by the number of those who did not submit ballots because the voting materials were "incomprehensible" and thousands of claimants are unrepresented.

Unrepresented objector and wildfire survivor Will Abrams also contested alleged voting issues. He asked Pullo whether PG&E told Prime Clerk to address potential irregularities.

PG&E instructed the company to respond to questions from people asking about the voting process or to provide a replacement ballot when requested, Pullo replied.

Abrams characterized the directives as "one-off, single claimant issues."

Mary Wallace, an unrepresented Camp Fire claimant, sought to cross-examine Pullo but was unable to because she could not properly connect to the video conference.

PG&E Executive Vice President and Chief Financial Officer Jason Wells will be cross-examined Thursday over circumstances leading to the utility filing for bankruptcy. This overlaps with a California Public Utilities Commission vote on whether to approve PG&E's exit plan.

PG&E filed for bankruptcy on Jan. 29, 2019 as it appeared increasingly likely the utility would be held liable for multiple fires.

The company listed assets of $71.4 billion and liabilities of $51.7 billion. Critics at the time noted PG&E is not insolvent, but its bankruptcy filing acknowledged an additional $30 billion in potential liability from the 2017 and 2018 Northern California wildfires.

The utility must emerge from bankruptcy by June 30 to participate in a $20 billion state mitigation fund to cover the cost of future blazes.