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BP Business Economic Loss Claim Appeal 2017-451: “Bad Debt” Expense Treated Correctly By Settlement Ptogram

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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 window treatment supplies in Odessa, Florida (Zone D) filed this BEL Claim and was awarded the sum of $222,158.82 (pre – 0.25 RTP) by the Claims Administrator (CA). BP appeals on one issue and submits a Final Proposal of $0.00. Specifically, BP complains about the CA’s treatment of Claimant’s “Bad Debt” expense and “Bad Debt Collected” revenue accounts.

In August 2010 Claimant recorded $15,097.85 as “Bad Debt”. In June 2011 Claimant collected the aforementioned sum from its customer. Claimant booked the collected revenue in an Other Income Revenue Account. Claimant’s bookkeeper mistakenly credited Bad Debt Expenses. The Accountant Compensation Calculation Schedules reflect that the CA’s professional accounting staff recognized the issue and dealt with it as follows:

“The claimant explained that the negative Bad Debt expense entry in August 2010 was a write-off of a job that was deemed

uncollectible at that time. When the balance was paid in June 2011, the Claimant reported the recovery of this write-off in the

Previous Bad Debt Collected revenue account. Accounting Review reversed both of the entries to reflect the reversal in the month the

write-off was reported. “

Claimant posits that even if BP is correct, the other Income is not treated as part of the operating revenue of the Claimant and would not be included in the calculations. Further, Claimant asserts that if the net effect of the entire transaction is the removal of the credit to Bad Debt Expense (Variable Expense), the Compensations Amount would actually increase by$14.00.

BP could have quantified the effect of the alleged error on the Compensation Amount but did not. Further, in BP’s Final Proposal it does not address Claimant’s explanation nor does BP dispute Claimant’s re-calculation. Instead, BP proposes remand on $0.00.

The panel finds no basis for remand. Given the “baseball process” in the Settlement Agreement, Claimant’s Final Proposal must prevail.

 

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