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BP Business Economic Loss Claim Appeal 2015-1321: Business ceased full time services before May 1, 2010


The following is an Appeal Panel Decision issued pursuant to Section 6 of the BP Deepwater Horizon Economic & Property Damages Settlement Agreement and the Rules Governing the BP Appeals Process. Links may have been added to assist the reader. The original decision may be found here, as well as a glossary of BP Settlement terms.

Claimant is an automated drafting service in St. Petersburg, Florida. The Settlement Program determined that Claimant’s failed business is ineligible for compensation under the Settlement Agreement because it effectively ceased operations before May 1, 2010, thus not meeting the criteria defining a Failed Business under Policy 506 v2 at 2.

Claimant maintains the Settlement Program erred in denying this claim and in finding that the business “ceased operations and wound down, entered bankruptcy through the filing of a petition for bankruptcy protection in a court of competent jurisdiction, or otherwise initiated or completed a liquidation of substantially all of the business assets on or before May 1, 2010,” as set forth in the Post-Reconsideration Denial Notice. Claimant asserts its business was operating and existing and continued to carry on operations and incur expenses up to May 1, 2010 and beyond, until registering its liquidation with the State of Florida. Since the Claimant business did not actually cease operations until September 24, 2010, four and one-half months after May 1, 2010, Claimant argues the claimant should be paid under the “Failed Business” framework, as expenses were paid and there were “operations” going on until September, 2010.

The question is whether Claimant in fact initiated or completed a liquidation of substantially all of the business assets before May 1, 2010. Businesses that failed before May 1, 2010 are ineligible under the Settlement Agreement (see Settlement Agreement at 38.68, Exhibit 6; Policy 506 v2) because the failure cannot be blamed on the Spill. Claimant’s assertion that it failed in September 2010 is based on the date on which Claimant officially registered its dissolution with the State of Florida. However, Policy 506 recognizes that a business’s “actual failure date” may not coincide with the date listed on the Claim Form or the date in which Claimant registers its dissolution with the state. See Policy 506 v2 at 2. “Where there is evidence that the claimant ceased to . . . perform its full time services,” on a different date than that listed on the Claim Form, the Settlement Program is to “apply its professional judgment in determining the actual failure date.” Id.

In this case, the Settlement Program reviewed all of the evidence on the record and concluded that Claimant “ceased to . . . perform its full time services” several months before May 1, 2010. Claimant concedes that it earned no income beyond December 2009. (i.e., five months before the spill). Claimant’s 2010 P&Ls as well as its 2010 Form 1040 (Schedule C) reflect $0 in gross receipts or sales for 2010. Accordingly, the Settlement Program reasonably concluded Claimant “ceased to perform its full time [automated drafting] services” in December 2009. Policy 506 v2 at 2.

Based on the record evidence, the Settlement Program correctly found that Claimant may not recover under the Settlement Agreement as Claimant’s business had essentially failed before May 1, 2010. Accordingly, the Settlement Program’s denial was proper, and it is hereby upheld.

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