Pacific Gas & Electric bankruptcy case costing $1 million in weekly legal fees

By David Kravits, The Associated Press
Saturday June 22, 2002

SAN FRANCISCO — It’s payday for the lawyers and consultants in the 14-month-old Pacific Gas and Electric Co. bankruptcy case. 

In what is shaping up as one of the most expensive cases in U.S. bankruptcy history, the legal fees are more than a combined $900,000 per week, or about $90 per minute, according to court documents. 

Ultimately responsible for paying for these services — with some experts billing as much as $750 an hour — are the utility’s 4.6 million California ratepayers. And many of the same lawyers are working on a bankruptcy reorganization plan for the utility that at least one ratepayer watchdog group thinks could ultimately raise electricity rates, a position the utility disputes. 

“It’s absolutely outrageous that they’re spending almost $1 million a week on lawyers and the ratepayers will pay for it,” said Mindy Spatt, a spokeswoman for the watchdog group Utility Reform Network. 

A hearing is set in U.S. Bankruptcy Court for July 2 in which a judge is expected to approve the latest round of legal and consulting bills. The court’s public watchdog, the U.S. Trustee’s office, is urging the court to reduce them by hundreds of thousands of dollars. 

The trustee’s office squelched a $10,000 airfare ticket and a $4,000 computer printer, among other bills, in previous billing cycles. 

From April 6 of last year when the case was filed to March 31 of this year, $46.1 million has been billed in legal and consulting expenses, according to court records. Expenses since March 31 have not been submitted to the court. 

The expenses are a fact of life for American corporate bankruptcy, in which company executives, private attorneys and consultants are enriched. 

In March, the utility gave about $64 million in retention bonuses to PG&E managers to keep them from quitting while it works itself out of bankruptcy protection. Now it’s time for the private lawyers, accountants and other professionals working on the case to get their piece of the money pie in the ongoing dispute over $44 billion in debt claimed by thousands of creditors. 

“This is an expensive proposition — bankruptcies always are when there is this much at stake,” said David Huardo, a president of the international Energy Bar Association. 

Even so, the case is expected to be litigated more cheaply than some other big-money bankruptcies. Consider the Enron Corp. bankruptcy. It has generated $69 million in legal bills but is half as old as the PG&E case.