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 appeals the denial of its Start Up BEL claim. (It should be noted that Claimant filed this, and its other related claims, as a general BEL claim. However, the Settlement Program converted them to Start Up BEL claims.
Claimant is a Multi-Facility business. The issue presented in each of the claims for its Facilities is the same – whether or not Claimant was operating at the time of the Spill. Claimant was incorporated prior to the Spill and doing business for many years. At the time of the Spill, the Facilities that form the basis of these claims were in operation, but were owned by an unrelated entity. On August 31, 2011, Claimant acquired all of the assets of this unrelated entity. Claimant subsequently filed a claim for all of these Facilities, using the profit and loss statements and tax returns of the unrelated entity.
As of this writing, two other Panels have considered claims brought by Claimant for other Facilities. Both Panels have upheld the denials of those claims, citing the District Court’s decision in Appeal 2016-300. There, a claimant, who was incorporated and doing business prior to the Spill, purchased assets from an unrelated entity after the Spill. The Court stated noted that the “transaction at issue was one where the claimant entity purchased certain assets, not where the predecessor entities themselves were purchased.”
This District Court appears to have drawn a bright line as to when a Claimant can piggy back onto the predecessor entity in order to make a claim. If the purchase involved a stock sale, then the answer is “Yes.” If the transaction was an assets sale only, the answer is “No.”
Claimant was invited by this Panel to distinguish the District Court’s decision from the instant appeal. Claimant responded by suggesting that the “Court has misapplied the Settlement Agreement to the facts of [Appeal] 2016-300.”See Claimant’s Reply Brief to Appeal Panel Questions. Claimant argues that “there is nothing in the [Settlement] Agreement or corresponding policies that prevents a
claimant from using the financial information of the prior owner of purchased assets in the claim calculation, especially where there was an explicit transfer of assets and assignment of claims to the claimant.”Id.
This Panel, and other Panels as evidenced by prior decisions with similar facts, is sympathetic to Claimant’s position. Were it not for the District Court’s decision in Appeal 2016-300, this Panel would overturn the Program’s denial. That said, this Panel is unable to distinguish the facts in this appeal from those in Appeal 2 and must therefore abide by that decision. Consequently, the Program’s denial of this Claim is upheld.
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