PG&E Co. receives bankruptcy court approval to settle certain claims

SAN FRANCISCO, Dec. 27, 2001 – Pacific Gas and Electric Company today received approval from the U.S. Bankruptcy Court to proceed with the investigation, negotiation and settlement of certain pre-petition claims, including all of those under $100,000.

The court’s order allows the utility to settle the amounts at which the claims will be allowed, but does not authorize payment of any such claim. Settled claims would be paid pursuant to the plan of reorganization.

Approximately 12,800 claims have been filed, with about 80 percent of them for less than $100,000 and the remaining 20 percent for amounts in excess of $100,000. The utility received authority to resolve the following categories of claims without seeking review and approval for settlements reached from either the Official Creditors’ Committee or the bankruptcy court:

— Claims where the allowed amount settled on is $100,000 or less.

— Certain claims where the proposed allowed amount exceeds $100,000, but is no more than $5 million, and is the lesser of (a) 110 percent of the amount of such claim as scheduled by PG&E in the Amended and Restated Schedules, and (b) $500,000 more than the amount of such claim as set forth on the Schedules. (For example, where the Scheduled Amount of a claim is $4 million, and the creditor has filed a proof of claim for $5 million, if the parties reach a settlement whereby the claim would be allowed at $4.4 million, no Court, United States Trustee or Committee review would be required.)

Where PG&E and the claimant cannot reach a mutually agreeable settlement, the court will resolve the claim.

The court also approved the utility’s request to object to groups of claims on the basis that they are, for example, duplicative, late-filed or have been paid, without waiving its right to assert additional objections to the same claims, if necessary.

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