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BP Business Economic Loss Claim Appeal 2016-2229:Claimant’s Expenses Appropriately Allocated When They Were Incurred

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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 Settlement Program calculated an award of $56,311.79, pre-RTP for Claimant. BP alleges the Settlement Program erred in its treatment of Claimant’s January 2009 “Customer Allowances Point of Sale Retail” revenue credits by failing to adjust what BP asserts to be one disproportionate entry for these credits recorded at the
end of Claimant’s fiscal year, rather than allocating the credits across the full fiscal year over which they accrued.
BP points out that Claimant sporadically recorded revenue credits in its “Customer Allowances Point of Sale Retail” line in a few select months between June 2006 and January 2009. These credits range from as small as zero in most months and $34.35 in August 2008 to as large as $47,338.27 in January 2009. By contrast, Claimant began recording monthly “Customer Allowances Point of Sale Retail” revenue credits in the ordinary course of business beginning in January 2010. BP asserts that Claimant’s sporadic recording of these credits in most months and its recording of one large credit at the end of Claimant’s Fiscal Year 2008 suggests that Claimant recorded a year-end adjustment as a credit in the final month of that year. BP requests that the Appeal Panel remand this claim to the Settlement Program to inquire regarding Claimant’s large January 2009 “Customer Allowances Point of Sale Retail” revenue credit. In the alternative, BP submits an Initial Proposal of $26,099.51, pre-RTP, which allocates this credit of $47,338.27 over the full fiscal year in which Claimant recorded it as a percentage of Claimant’s sales.
In an affidavit Claimant explains that it runs a promotional event where customers can earn a voucher to be used at a later date by spending a certain amount during the event period. This event typically takes place in the holiday shopping season, with the voucher redemption occurring only in January. Claimant recorded the
redeemed voucher discounts in the “Customer Allowances Point of Sale Retail” account on its P&Ls. Because the vouchers are redeemed in January 2009, the expense, asserts Claimant, is appropriately recorded in January 2009. Thus, an allocation “across the full fiscal year over which they were accrued” requested by BP would be
incorrect because the revenue credits were accrued when the vouchers were redeemed, which only occurred in January 2009.
This panelist finds that the Claimant has made a sufficient explanation to back up the Settlement Program’s treatment of this matter. BP’s appeal is denied.

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