Chapter 11 Update: Pacific Gas And Electric Company Receives Court Approval To Pay Certain Pre-Petition Claims



Allowed Claims Under $5,000, Valid Mechanics' Lien Claims & Valid Reclamation Claims Will Be Paid On or Before July 31, 2002


SAN FRANCISCO - Pacific Gas and Electric Company today received approval from the U.S. Bankruptcy Court to pay certain valid pre-petition claims, including claims for amounts of $5,000 or less (or claims voluntarily reduced by the claimant to $5,000), mechanics' lien claims and reclamation claims. These payments will be made on or before July 31, 2002.

In PG&E's bankruptcy case, more than 13,000 proofs of claims have been filed. The utility estimates over 4,000, or almost one-third of the claims, are for $5,000 or less. Many of the creditors in this category are individuals or small businesses. Claims filed for amounts under $5,000 total approximately $6.7 million.

There are approximately 50 mechanics' lien claims filed against PG&E, totaling approximately $10.2 million. A mechanics' lien claim is a claim secured by a statutory lien against real property on which the claimant has provided labor, services, equipment or materials.

About 50 reclamation claims have been filed for a total of approximately $5.5 million. These claims are for the value of goods delivered to the utility immediately prior to or shortly after the filing of the Chapter 11 petition on April 6, 2001.

PG&E estimates it will pay no more than $22.4 million to pay in full all valid claims in these three groups.

By paying these claims, PG&E reduces its ongoing liability for post-petition interest related to these claims. In addition, this effort will streamline the claims resolution process and allow the utility to focus its resources on the remaining larger, more complex claims.

All undisputed claims of $5,000 or less, mechanics' lien claims and reclamation claims will be paid on or before July 31, 2002, with interest accrued at the Federal Judgment Rate in effect as of the date of PG&E's bankruptcy petition, on the allowed amount of the claim from April 6, 2001 through June 30, 2002.

For disputed claims, upon resolution of the claim by either a Court order or settlement, PG&E will pay the allowed amount of those claims plus interest accrued at the Federal Judgment Rate from April 6, 2001, through the date of the payment.


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