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PG&E Bankruptcy Judge Hears Complaint About Fire Victims’ Lawyer

PG&E Bankruptcy Judge Hears Complaint About Fire Victims’ Lawyer

(Bloomberg) -- A U.S. bankruptcy judge heard arguments Tuesday over whether a prominent lawyer for victims of fires blamed on PG&E Corp. has a potential conflict of interest in the case that taints the voting of thousands of claimants on the power company’s reorganization plan.

A fire survivor and an attorney who represents a former member of the committee for victims in the bankruptcy argued that lawyer Mikal Watts had a possible conflict after disclosing that two PG&E investors had bought stakes in a $100 million line of credit provided to his law firm, Watts Guerra LLP. Attorney Steven Kane asked the court to require Watts to disclose the potential conflict in writing to his more than 16,000 clients and obtain waivers from them.

Watts said the investments by Centerbridge Partners LP and Apollo Management didn’t constitute a conflict of interest and that he had disclosed their involvement in his loan to his clients on multiple occasions including during town hall meetings in December, April and May. Watts said Centerbridge and Apollo were “bit” players in the bankruptcy negotiations and their representatives introduced him to the principal negotiators in the case.

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