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BP Business Economic Loss Claim Appeal 2016-2110:Different P&L’s and EIN Numbers Do Not Show Claimant Was Operating Prior to the Spill

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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 retail hardware store in Key West,Florida, appeals the correctness of its BEL award. Claimant asserts the Settlement Program(SP) incorrectly excluded financial data for the years 2007 through 2009 from an entity absorbed by claimant in November 2009 and using such data of both in a prospective fashion after that date in calculating the award.
BP contends the SP properly followed the provisions of the Settlement Agreement in the manner claimant’s financial information was analyzed and applied.
A review of the record discloses that claimant operated separately from as distinct businesses with different addresses and EIN numbers. Each business maintained its own P&Ls until claimant merged with and absorbed on November 10,2009. The Calculation Notes, paragraph 9, styled “Business Merger” reflects this entry: “Due to the nature of the merger,and the fact that operations and the claimant’s EIN remained the same,it is determined that the business is one continuous entity and no further review is necessary. Further, as  *** was a separate legal entity prior to the merger with a separate EIN, the financial statements prior to the merger were not
included in the compensation calculation.”
The SP also explained that of the three different sets of P&Ls submitted, it elected to use the one for claimant only before and after the merger rather than one which was a consolidation of the two operating as separate entities or the other which was for only operating before the merger. Finally, in paragraph 18 of the Calculation Notes, the SP, in denying reconsideration explained: ” ***and [claimant] were two independent legal entities who had separate EIN numbers, maintained separate financial statements prior to November 2009, and reported their Financial Data on separate 1120S Tax Returns. As such,the consolidated P&Ls containing pre-merger Financial Data do not represent the financial records of one continuously operating business and are not included in the compensation  calculation. The profit and loss Statements used for the compensation calculation contains the Financial Data for the Claimant only; inclusive of any business acquisition and dispositions from the date of acquisition/dispositiongoing forward.”
This explanation exhibits the exercise of reasonable professional judgment consistent with the dictates of the Settlement Agreement and Exhibit 4.This panelist thus concludes there is no error in the manner the SP chose to calculate the award.Accordingly, the decision of the Claims Administrator is affirmed, the final proposal of BP is selected and the appeal of claimant is denied.

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