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BP Business Economic Loss Claim Appeal 2016-1979: DWH Accountant Used P&Ls That Showed When Claimant Received Its Commissions

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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.

Claimant, a travel agency in Belle Chasse, Louisiana, appeals the denial of its BEL claim for failure to satisfy the causation requirements of Exhibit 4B of the Settlement Agreement. Claimant asserts the Settlement Program(SP) incorrectly applied the provisions of policy 495 by allocating commissions earned via cruise clients to a period other than when clients booked their trip and paid a deposit.
BP argues that using an analysis based on “economic reality” the SP acted correctly. A review of the record discloses claimant used two sets of P&Ls, one using a cash basis approach,the other using accrual basis.
The Calculation Notes of the program reviewer are instructive: “DWH Accountant noted Claimant provided two sets of financials for revenue. One set of P&Ls,the QuickBooks exports, contains revenues based on trips that were completed and therefore when cash was received. Per Doc ID page 1,once a ship has sailed, the Claimant receives the commissions earned from the supplier one to two months later. The other set of financials provided, the reports, include sales reports for each month. These figures reflect the estimated revenues as trips were booked. However, in between the time each trip’s revenues is initially booked in the sales report and when the trip is actually completed, customers can cancel trips and refunds can occur.***. As such, DWH Accountant used the P&Ls that reflect when the commissions were received.
While the Claimant booked the cruise at an earlier point in time,the commissions were not received until after the trip was taken. Since refunds and cancellations could
occur prior to the sail date, DWH Accountant deemed the set of P&Ls that contemporaneously displayed when the Claimant received the commission was a better reflection of the Claimant’s business economic reality for purposes of the claim calculation.” This panelist concludes this explanation constitutes a reasonable basis for the
determination made by the SP.
It is within the permissible bounds of the exercise of professional judgment that Policy 495 vests in the SP and of which the supervising court has approved following discretionary review. There is no error.
(In an eleventh hour maneuver claimant attempts to challenge the failure of the SP to designate claimant as a tourism business. This issue was not raised in claimant’s notice of appeal or initial memorandum and is therefore procedurally barred.)
Finally, there is no basis to stay this appeal pending appellate review of the implementation of policy 495. Accordingly,the decision of the Claims Administrator is affirmed and the appeal of claimant is denied.

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