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The alternative reorganization plan for bankrupt Pacific Gas & Electric Co. could face some rough going in its quest to get in front of creditors. In federal bankruptcy court Wednesday, PG&E attorneys signaled that they might object to various aspects of the California Public Utilities Commission’s recently filed reorganization plan — and questioned the CPUC’s authority to even file a plan. Previously, PG&E had indicated that it would hold its fire as the CPUC pushed its disclosure statement through the bankruptcy court, and let creditors choose between the rival plan and its own reorganization plan. “We had originally told you that based on the term sheet we did not intend to object,” said James Lopes, the Howard, Rice, Nemerovski, Canady, Falk & Rabkin lawyer representing PG&E Co. “In our view the material filed is significantly different from the term sheet.” Among the key differences, said Lopes, is the plan’s provision that PG&E take on billions of dollars in new debt and issue stock in the utility. Moreover, PG&E pointed to a suit filed in the California Supreme Court by the Foundation for Taxpayer and Consumer Rights that claims the commission’s plan is illegal. Unlike what the CPUC had told the court previously, said Lopes, this suit brings into question whether the state regulatory agency has the authority to file a reorganization plan. Lawyers for the CPUC called the suit a “red herring,” and maintained it would have no bearing on their plan. “One of the wonderful and terrible things about America is that anybody can sue anybody,” said CPUC General Counsel Gary Cohen. U.S. Bankruptcy Court Judge Dennis Montali has set a deadline of May 3 for formal objections to the CPUC’s disclosure statement, with a hearing on objections slated for May 9. Montali also used Wednesday’s hearing to officially approve PG&E’s own disclosure statement. During the seven months it took PG&E to win that approval, the utility’s disclosure statement weathered 73 objections.

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