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BP Business Economic Loss Claim Appeal 2017-85:Claimant’s Consignment Income Re-Allocated And Passes AVM Methodology

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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 Claims Administrator originally denied the BEL claim of this machine parts manufacturer in Wilmer, Alabama based on failure to pass causation. Claimant successfully appealed this decision.
On remand, the program accountant was instructed to reallocate Claimant’s consignment revenue to the months of usage rather than delivery and to apply an appropriate methodology under Policy 495. The accounting vendor dutifully complied with the panel’s instructions and then applied the AVM methodology.  As a result, Claimant received an Eligibility Notice with an award of $138,421.71, pre-RTP. BP appeals.
BP’s assignment of error focuses on Claimant’s May 2008 revenue and an adjusting journal entry of $198,610.69. This entry, according to BP, was made to correct a journal entry on March 31, 2008. Thus, BP argues that the program accountant should have reallocated this amount to March. If the proposed reallocation is made, BP contends that Claimant would again be unable to satisfy the causation requirements of Exhibit 4B. BP therefore seeks remand or alternatively presents a Final Proposal of $0.
As noted, the program accountant removed the original adjustments for consignment revenue and reallocated them to the months that the parts were used as instructed in the original appeal panel decision. Policy 495 was then applied and four of the seven criteria were triggered. At this point, the accountant utilized the AVM methodology to restate the adjusted P&Ls. In urging for an additional adjustment of revenue from May 2008 to March, BP argues that the journal entry at issue
was to correct an error. However, it is just as likely that this adjustment involved Claimant’s consignment sales or accounts receivable that were also the subject of journal entries. The program accountant’s application of Policy 495 and the AVM methodology, by definition, resulted in sufficient matching of revenue and expenses as required by the courts.
De novo review leaves this panelist unpersuaded that the additional reallocation urged by BP was required. Accordingly, the Claimant’s Final Proposal, which adopts the Administrator’s award, is selected.

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