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BP Business Economic Loss Claim Appeal 2016-1256:Claimant Who Purchased Business Assets In August 2010 Can Use Prior Owner’s Financial Data and Is not a Start-Up

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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.

The Settlement Program denied the BEL Claim of Claimant on the basis Claimant had not commenced operations at the time of the Spill as required by the Settlement Agreement, citing policy 362 v2.
BP asserts that under the Settlement Agreement, a claimant “with less than eighteen months of operating history at the time of the DWH Spill” is considered a start-up business and is analyzed under the Start-Up BEL Framework, pursuant to the Settlement Agreement, Ex. 7 at 1. BP goes on to argue that Claimant falls within this Framework, as Claimant purchased and acquired the assets of *** in August 2010, which was already in operation. Thus, reasons BP, Claimant, at the time of the Spill, had less than eighteen months of operating history, and is ineligible for the BEL Framework.  BP further maintains that because Claimant was not in operation at the time of the Spill, the claim was also properly denied under the Start-Up BEL Framework, as Policy 362 dictates that a claimant who was not in operation at the time of the Spill is ineligible for compensation.
The record reflects that on August 21, 2010, Claimant acquired the assets of ***. The assets consisted of XXX at Decatur, Alabama. The restaurant was operated by XXX prior to the asset transfer. After the asset transfer to Claimant, the restaurant continued to operate in the same location, under the same name, and with the same employees. Claimant had the same officers as the predecessor except for one, who resigned as an officer of the business. Otherwise, the business operation was a
continuation of the same enterprise in every respect.
The basic requirement for entities to make a claim in the settlement is contained in the Class Definition, under Section 1.2. The entities included in the class definition are those who were “doing business or operating in the Gulf Coast “as” and “at any time from April 20, 2010 to April 16, 2012, owned, operated, or leased a physical facility in the Gulf Coast Areas…and (A) sold products in the Gulf Coast Areas.”
Therefore, there is nothing in the Agreement or corresponding policies that prevents a claimant from using the financial information of the prior owner of its business. Claimant was the successor-in-interest to and continued to operate the same business, at the same location, with the same employees, and with the same name. Although the transaction was a sale of assets, and not a sale of the company’s stock, in substance it was merely a change in corporate organization. The transaction was
nothing other than an entity merely changing its legal form of organization, reflecting the departure of one of its officers.
The prior owner’s financial information shows that the business had an operating history more than eighteen months before the Spill. As a result, the claim is not a
Start-Up BEL claim, and should be processed as regular BEL claim using all of the financial information provided. As it is not a Start-Up BEL claim, Policy 362 v.2 was
not applicable, and was improperly applied as a basis for the Denial.
Accordingly, the Denial is hereby overturned, and the matter remanded for calculation under the BEL Framework.

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