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BP Business Economic Loss Claim Appeal 2016-641: “Newly acquired business” may be treated as standard BEL, not start up


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.

This is an appeal from the denial of one of many Start-Up Business Economic Loss claims which were filed on behalf of this Claimant. The Claims Administrator also denied this claim in reliance on Policy 362, which provides that a Start-up business must be doing business or operating in the Gulf Coast Areas or Specified Gulf Waters as of April 20, 2010. Claimant acquired twenty-two (22) locations from [XXXXX] in a bankruptcy sale that occurred on October 6, 2010. In its request for reconsideration, Claimant asked to be considered a “newly acquired business,” as provided by former Policy 354. If a “newly acquired business” meets certain criteria, the business may be treated as a standard BEL claim.

In order to be considered a standard business under the BEL framework, Claimant was required to produce financials from the prior owner. After the initial denial of the claim, and after its request for reconsideration, Claimant focused on obtaining and submitting financial records. These records were in the possession of an accountant for [XXXXX] in the bankruptcy proceeding. The bankruptcy trustee repeatedly opposed the release of these records which impeded Claimant’s ability to provide them to the Settlement Program. Ultimately, the Bankruptcy Court ordered that the financials be released to the Claimant but this came too late to be considered by the Administrator on reconsideration. Thus, the Administrator only reconsidered the claim as a Start-Up BEL claim, which was once again denied.

On appeal, Claimant argues that the denial of its Start-Up BEL claim should be overturned. Now armed with the financials of [XXXXX] Claimant also seeks remand in order to be given an opportunity to assert a “newly acquired business” claim.

The Administrator’s denial of Claimant’s Start-up BEL claim was proper as Claimant failed to establish an operating history as of April 20, 2010. It should be noted that BP expressed that it is amenable to a remand in order for consideration of the claim as a standard BEL claim. “BP, while reserving all rights and without admission, does not object to Claimant filing its claim under that framework.” Accordingly, this claim is remanded to the Settlement Program in order to give the Claimant an opportunity to assert a “newly acquired business” claim in light of the financials from the prior owner. This panelist takes no position on whether the claim should or should not qualify under the standard BEL framework and leaves that determination to the Settlement Program.

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