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A California judge yesterday ordered Pacific Gas & Electric to pay a $3.5 million fine for causing the Camp Fire, the blaze that killed scores of people and destroyed the town of Paradise in 2018, the New York Times reported. Judge Michael R. Deems of Butte County (Calif.) Superior Court read the sentence, which matched a plea agreement between the company and a local prosecutor, after hearing statements from survivors of the 84 people killed in the fire, many of whom said PG&E was getting away with a slap on the wrist. The judge seemed to echo that sentiment. “If these crimes were attributed to an actual human person rather than a corporation, the anticipated sentence based on the applicable statutes to which the defendant has pleaded guilty would be 90 years to be served in state prison,” Judge Deems said. “Nevertheless, the court’s sentencing options are limited.” PG&E pleaded guilty on Tuesday to 84 counts of involuntary manslaughter and one count of illegally causing the fire. An estimated $30 billion in liability from that and other fires forced the company to seek bankruptcy protection in January 2019. State regulators have said that the utility repeatedly failed to maintain a transmission line that broke from a nearly 100-year-old tower, igniting the Camp Fire. The company’s failure was all the more glaring because the line cut through a forested and mountainous area, and some of the company’s towers had been knocked down by strong winds well before that blaze.

A U.S. subsidiary of Ireland’s Trane Technologies PLC has filed for bankruptcy as a way to deal with roughly 100,000 asbestos lawsuits, fearing the personal-injury litigation could otherwise continue for decades, WSJ Pro Bankruptcy reported. Aldrich Pump LLC, which has its North American headquarters in Davidson, N.C., said that the chapter 11 strategy centers around creating a trust that would pay “legitimate” asbestos claims, including from people with mesothelioma. Murray Boiler LLC, an affiliated company, also filed for bankruptcy. The businesses are owned by publicly traded Trane, an Irish industrial manufacturing company, according to papers filed in U.S. Bankruptcy Court in Charlotte, N.C. Neither Trane, which makes climate-control products, nor other subsidiaries are part of Wednesday’s bankruptcy filing. Aldrich said that it didn’t use asbestos in its manufacturing process but made industrial equipment that, in some instances, had asbestos-containing parts. Most of the lawsuits filed against the company involve its pumps and compressors that used metal piping through which liquids or gases flow. A gasket, a sealing product, was inserted between the pipes to avoid leaks. Decades ago, certain gasket materials that were the industry standard at the time contained asbestos, Aldrich said. About 20 years ago, after the miners and sellers of raw asbestos themselves began seeking protection from creditors in bankruptcy court, the number of mesothelioma cases against Aldrich and Murray doubled, the company said. Currently, Aldrich and Murray face roughly 100,000 asbestos-related lawsuits nationwide, according to court papers. The vast majority were filed at least a decade ago.

The Diocese of Rockville Centre (N.Y.) could face bankruptcy if the nearly 100 child sex-abuse lawsuits filed against it are not put on hold, according to court papers, LIHerald.com reported. Last month, the Diocese filed a motion in Nassau County Supreme Court for a stay pending an appeal, claiming that it is straining under the legal defense costs and that it has lost income due to the coronavirus pandemic. When the parishes closed in late March, donations declined by 77 percent, according to the filing, no payments were received between March 23 and April 3, and during April — which included Holy Week, a normally significant source of revenue, donations were down 60 percent, according to the diocese. The diocese, under the leadership of Bishop John Barres, has spent $3.7 million in its defense against 94 lawsuits filed against it under New York’s Child Victims Act, which provides a legal window to revive decades old abuse claims. The diocese said bankruptcy is “a last resort” that is “not an attempt to turn its back on victims or shield predators from any punishment they deserve.” In April, the diocese lost its challenge to the law’s constitutionality when Nassau Supreme Court Justice Steven Jaeger ruled the law “a reasonable response to remedy the injustice of past child sexual abuse.” The diocese is appealing the decision and argued that if it must continue to litigate the CVA cases while the appeal is ongoing, it will also be forced to end a program that has so far paid out $57 million to 320 abuse victims.

PG&E Corp. pleaded guilty to 84 counts of manslaughter for its role in sparking California’s deadliest wildfire, on the same day that a separate judge said that he would clear the way for the company to exit bankruptcy, the Wall Street Journal reported. The San Francisco-based utility became one of the few U.S. corporations to be convicted of homicide-related charges in a dramatic scene that unfolded yesterday in Superior Court in California’s Butte County, where the 2018 Camp Fire razed the town of Paradise. PG&E Chief Executive Bill Johnson entered the guilty pleas for each of the felony counts of involuntary manslaughter, looking at the images of the 84 victims on a screen as Judge Michael Deems recited the counts in alphabetical order. Johnson, who joined PG&E last year and is set to step down as its CEO this month, also pleaded guilty on its behalf to one count of unlawfully causing a fire. The company, which has agreed to pay the statutory maximum penalty of $3.48 million, is expected to be sentenced later this week. Meanwhile in a separate hearing in the U.S. Bankruptcy Court in San Francisco, Judge Dennis Montali said he intends to approve PG&E’s $59 billion reorganization plan, which involves issuing huge amounts of new debt and equity to help pay liability claims related to wildfires. Formal signing could take a few more days, as remaining issues are resolved and the documents are finalized, the judge said. The proceedings bring PG&E closer to closing a dark chapter in its history, after fires sparked by company equipment killed more than 100 people and burned more than 15,000 homes in Northern California in 2017 and 2018. The company, which provides gas and electric services to 16 million people, or nearly one in 20 Americans, filed for chapter 11 protection in January 2019, citing more than $30 billion in potential fire-related liability claims.

The Diocese of St. Cloud (Minn.) filed for bankruptcy in U.S. Bankruptcy Court Monday, just weeks after reaching a $22.5 million settlement with clergy abuse survivors, the Minneapolis Star Tribune reported. The chapter 11 filing provides a "framework for resolution" of the clergy abuse claims filed by 70 individuals against 42 priests dating to the 1950s, the diocese said. The diocese announced its intent to file for bankruptcy in 2018 to pay for the claims, and has been negotiating with attorneys for the survivors since. St. Cloud is the fifth diocese in Minnesota, and the 26th Catholic diocese or religious order in the nation, to file for bankruptcy. In all cases, it followed a wave of lawsuits charging priest sexual misconduct with minors. The New Ulm Diocese, Duluth Diocese and Archdiocese of St. Paul and Minneapolis have emerged from bankruptcy, said attorney Mike Finnegan. Winona Diocese has not reached a resolution, he said. The Crookston Diocese, with 15 abuse lawsuits, did not file for bankruptcy. The $22.5 million survivor fund will be administered by an independent trustee appointed by the bankruptcy court, with input from the committee representing survivors' interest, the diocese said. The funds "are made up of insurance and benefits coverage settlements, cash and property contributions from the diocese, and contributions from parishes," the diocese said.

The Buffalo (N.Y.) Diocese’s lists of assets and liabilities filed with the U.S. Bankruptcy Court identifies multiple investment funds and bank accounts holding in excess of $28 million, dozens of properties and a fleet of vehicles. What the schedule doesn’t mention is insurance coverage, which has played a huge role in the resolutions of other chapter 11 reorganizations by dioceses and archdioceses facing child sex abuse lawsuits, the Buffalo News reported. Eight insurance companies, for example, agreed in 2018 to pay $137 million toward a $210 million fund to settle abuse claims in the Archdiocese of St. Paul & Minneapolis. Of the nearly $800 million in bankruptcy settlements reached by 15 Catholic dioceses, archdioceses and religious orders since 2004, more than half of the funds have come from insurers, according to research by Pennsylvania State University law professor Marie T. Reilly. Buffalo Diocese lawyers are now counting on the yet-to-be quantified insurance coverage as they try to resolve the claims of more than 250 people who allege they were abused as children by priests or other employees. “Insurance is without question in this case our largest and most important asset,” Buffalo Diocese bankruptcy attorney Stephen Donato said during a hearing last week with Chief Judge Carl L. Bucki of the U.S. Bankruptcy Court in the Western District of New York.

PG&E Corp. has won approval from a bankruptcy judge for an order allowing it to go to market to sell $20 billion worth of new debt and equity as it awaits approval of its plan to exit chapter 11, WSJ Pro Bankruptcy reported. Judge Dennis Montali said at a hearing yesterday in the U.S. Bankruptcy Court in San Francisco that he will sign the order authorizing the start of the financing effort, setting the stage for PG&E to take advantage of favorable conditions in the debt markets. A decision on confirmation of the company’s chapter 11 exit proposal could be days away, he said. California’s largest utility needs the cash to absorb $25.5 billion worth of wildfire damage claims it has agreed to pay, cleaning up the aftermath of disastrous fire seasons in 2017 and 2018. PG&E expects to go to the public debt markets for $10.7 billion of bond financing, including $5.9 billion of investment grade bonds issued by the utility, and $4.75 billion of high-yield bonds at the corporate level.

PG&E Corp. yesterday announced the names of 11 new board members who will help steer the company after the expected conclusion of its bankruptcy case this year, the San Francisco Chronicle reported. The San Francisco parent of Pacific Gas and Electric Co. said that six of the new directors are from California, in keeping with the desires of state officials. PG&E agreed to “substantial modifications” to its board in a bankruptcy deal with Gov. Gavin Newsom this year. PG&E said that the directors will provide “substantial expertise in key areas critical to the company’s work” such as utility operations, safety, risk management, regulatory affairs, engagement with customers and more. New directors will be seated on the board “at or prior” to the end of the bankruptcy, PG&E said. PG&E’s announcement comes more than one month after the company said that only three of its current 13 board members would remain in their roles after the company emerges from chapter 11. It’s part of a series of changes coming to PG&E as its bankruptcy case winds down, including the forthcoming departure of CEO Bill Johnson.

A bankruptcy judge backed USA Gymnastics in its lawsuit to get one of the small business loans created by Congress to cover payroll costs during the coronavirus pandemic, saying that the embattled national body is likely to succeed in defeating the federal government’s rule excluding organizations in bankruptcy from obtaining the loans, the Wall Street Journal reported. USA Gymnastics filed for bankruptcy in December 2018, facing hundreds of lawsuits over its handling of decades of abuse by women’s team physician Larry Nassar, and as the U.S. Olympic & Paralympic Committee sought to revoke its status as the sport’s official governing body. The bankruptcy filing halted depositions and discovery in the lawsuits, for which mediation negotiations have dragged on for more than two years. It also halted the USOPC’s decertification efforts, creating an opportunity for USA Gymnastics to seek a reprieve. But the effort had an unexpected consequence when USA Gymnastics and other national sports governing bodies found themselves on the brink of a new financial crisis — the postponement of several lucrative domestic meets and the windfall expected from the 2020 Olympic Games, which may now be held in 2021. As dozens of its peers rushed to secure the loans from the federal government, USA Gymnastics had its application for the Paycheck Protection Program rejected by the Small Business Administration because it is in bankruptcy. USA Gymnastics then sued the federal government. Dozens of lawsuits challenging the SBA’s rule have been filed across the U.S. by small businesses, rural hospitals and Catholic dioceses arguing Congress never intended to exclude PPP loans from potential borrowers in chapter 11 bankruptcy. Judges who have ruled so far on the SBA’s position have come out both for and against the federal government, prompting appeals to higher courts. Read more. (Subscription required.) 

Be sure to read today's RDW column on recent bankruptcy cases and PPP loans. 

The judge presiding over the Boy Scouts of America bankruptcy has approved an agreement among attorneys to extend an injunction halting child sex abuse lawsuits against the organization’s 261 local councils until Nov. 16, the Associated Press reported. Under the agreement approved on Monday, local councils wanting continued protection from litigation must sign agreements by July 6 requiring them to provide information to the Boy Scouts about their finances, including real estate holdings, for sharing with creditor committees. The local councils, which run day-to-day operations for local troops, are not listed as debtors in the bankruptcy and are considered by the Boy Scouts to be legally separate entities, even though they are “related parties.” Judge Laurie Selber Silverstein will hear any objections to the extension of the injunction at a July 9 hearing. Also on Monday, Judge Silverstein appointed a three-person mediation panel that will try to resolve certain issues in the bankruptcy case through voluntary mediation instead of costly litigation.