PG&E Corporation, 610 B.R. 308

Background

Debtors PG&E Corporation and Pacific Gas and Electric Company filed Chapter 11 (petition date Jan. 29, 2019); dispute concerns the postpetition interest rate payable to four classes of allowed unsecured, unimpaired claims in a solvent-debtor plan.
Debtors (joined by certain shareholders) sought application of the federal postjudgment interest rate under 28 U.S.C. § 1961(a) as of the petition date (2.59%).
Official Committee of Unsecured Creditors and several ad hoc creditor groups opposed, arguing for contractual rates, state judgment rates, or other rates instead of the federal rate.
The court analyzed applicable Bankruptcy Code provisions (notably §§ 502(b)(2), 1123, 1124, and the chapter 7/11 interplay) and statutory construction principles, emphasizing that the Code — not a plan — fixes postpetition entitlements.
The court found In re Cardelucci controlling in the Ninth Circuit and held that unsecured creditors in a solvent chapter 11 receive postpetition interest at the federal rate; it rejected the argument that unimpaired status or plan terms permit a different rate.
The decision observes it will coordinate entry of orders with related make-whole litigation and did not immediately issue a separate order disposing of the motion.

Issues

Issue	Debtors' Argument	Unsecured Creditors' Argument	Held
Applicable postpetition interest rate for unsecured unimpaired claims	Federal postjudgment rate (28 U.S.C. §1961(a) as of petition date)	Contractual rates, state judgment rates, or other higher rates	Federal Interest Rate applies (Cardelucci controls)
Whether Cardelucci applies to unimpaired claims	Cardelucci governs all unsecured claims in solvent estates	Cardelucci addressed impaired claims only, so unimpaired claims differ	Cardelucci applies to unimpaired claims; no circuit distinction
Whether the Plan can alter Code-imposed postpetition entitlements	Plan should follow Bankruptcy Code; Code fixes the rate, not the Plan	Plan treatment (or lack of impairment) preserves contractual/default rates	The Bankruptcy Code (not plan language) limits rate; plan cannot override Code
Whether equitable or ‘‘fair and equitable’’ principles justify applying contract/default rates	Uniform federal rate promotes predictability and equity; statutory term means one rate	Equitable principles, absolute priority, or windfall concerns justify higher rates	Equitable arguments rejected; statutory uniformity controls

Key Cases Cited

In re Cardelucci, 285 F.3d 1231 (9th Cir. 2002) (holds unsecured creditors in solvent chapter 11 receive postpetition interest at the federal rate)
United Sav. Ass'n of Texas v. Timbers of Inwood Forest Assocs., Ltd., 484 U.S. 365 (U.S. 1988) (statutory interpretation requires holistic reading of the Bankruptcy Code)
In re PPI Enters. (U.S.) Inc., 324 F.3d 197 (3d Cir. 2003) (distinguishes impairment caused by the statute from impairment caused by the plan)
L & J Anaheim Assocs. v. Kawasaki Leasing Int'l, Inc. (In re L & J Anaheim Assocs.), 995 F.2d 940 (9th Cir. 1993) (analysis of impairment under section 1124 and plan alteration of rights)
Platinum Capital, Inc. v. Sylmar Plaza, L.P. (In re Sylmar Plaza, L.P.), 314 F.3d 1070 (9th Cir. 2002) (plan good-faith analysis where plan uses Code provisions that alter creditors' contractual rights)
Great W. Bank & Tr. v. Entz-White Lumber & Supply, Inc. (In re Entz-White Lumber & Supply, Inc.), 850 F.2d 1338 (9th Cir. 1988) (pre-1994 law on curing and reinstatement under plans)
Acequia, Inc. v. Clinton (In re Acequia), 787 F.2d 1352 (9th Cir. 1986) (shareholder voting-rights impairment analysis under a plan)
Travelers Cas. & Sur. Co. of Am. v. Pac. Gas & Elec. Co., 549 U.S. 443 (U.S. 2007) (bankruptcy law can preempt contrary non-bankruptcy law)
Raleigh v. Illinois Dep't of Revenue, 530 U.S. 15 (U.S. 2000) (limitations on state-law claims in bankruptcy)
In re Thompson, 16 F.3d 576 (4th Cir. 1994) (supports fixed statutory meaning of "legal rate")