Judge John C. Trotter (ret.), Trustee of the Fire Victims Fund, announced Tuesday in a letter to fire victims that he would retire effective June 30.
Trotter, who has faced increased criticism over the past six months, including a letter from the Butte County Board of Supervisors asking for more transparency, said at the end of his letter to victims that the decision to step down before the end of July was an attempt to keep a promise to his family that he would step down. retired after only two years of service.
In response to a letter from the Butte County Board of Supervisors, Trotter left a voicemail criticizing the board. This voicemail was widely criticized by local politicians and prompted a new letter from the board.
He will be replaced by Cathy Yanni, who has worked for the trust since its inception two years ago as a claims administrator.
Paradise Mayor Steve Crowder welcomed the news of Trotter’s retirement.
“I think it’s positive for trust and the victims of the fire,” Crowder said Wednesday afternoon. “I believe we needed an open line of communication with trust, which I didn’t feel Judge Trotter upheld that, but I believe we have that in the future with Cathy Yanni.”
Republican Assembly Leader James Gallagher (R-Yuba City) said the fund’s administration faced many challenges.
“I tried to work with the Trustee to push for faster payments with more transparency and accountability,” he said in a statement to the newspaper. “I will continue to work with the city, county and foundation to get results for those affected by the fire.”
In his letter to the victims, Trotter spoke about the creation of the trust and its recent history. He noted that the bankruptcy court had created two banks of money, one for insurance companies and one for fire victims, including plaintiffs from federal and state agencies.
Trotter indicated that the insurance fund received $11 billion in cash to meet its claim for $16 billion to its policyholders and to keep an additional $4 billion in reserve.
The trust it acquired over two years ago was funded with $13.5 billion, half in cash and half in PG&E common stock. He indicated that more than 85% of those affected voted in favor of the plan, and on July 1, 2020, as the utility recovered from bankruptcy, paid out $6.75 billion in cash and placed 478 million PG&E shares in the trust.
“At the time of this delivery, the shares were trading at approximately $9 per share,” he wrote. “This price created a deficit approximately $2.4 billion less than expected and it hovered between $10 and $12 to close at $9.78 as of Friday, June 17, 2022.”
In his letter, he said the trust still owns 377 million shares of the utility. He also said the trust hired Morgan Stanley to manage the sale of the first 100 shares, which brought the trust $1.2 billion.
Trotter said that after the trust was created, the only employees working for it were him and Yanni, who was its claims administrator.
He said their first task was to develop a system that would allow 70,000 fire victims to apply, which he said took time to set up and that would accept and process more than 250,000 “unique applications”. Since then, Trotter said they have received over 19,000 personal injury claims and over 400 death claims. The trust also handled 100 emotional distress claims, as well as over 20,000 loss of income claims and 38,000 real estate and personal property claims, which include the cost of loss of vegetation and the cost of replacing trees.
He said they ended up hiring 500 people, along with processing firm BrownGreer, who were responsible for receiving, reviewing and evaluating requirements.
Trotter also pointed out that the trust has run into tax problems, saying that the state and federal capital gains tax rate exceeds the 40 percent capital gains tax on any earnings above $9 per share.
Once they were able to resolve the matter with the help of their lawyers Brown Rudnick, Trotter said, the trust was able to raise another $100 million through capital gains tax avoidance.
Trotter also said the trust hopes to maximize its assets by obtaining a loan from the State of California or “from some other vehicle that will allow the trust” to complete and increase its pro rata without having to sell more shares in a down market. .
Although Gallagher said he does not support taxpayers paying the deficit bill, he wants to see his legislation exempting estimated payments from state income tax, which he says is one of his top priorities.