Deepwater Horizon Oil Spill

May 10, 2013 10:50 AM
 
Oil_Spill_Fire
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As a result of the Deepwater Horizon oil spill in the Gulf of Mexico, BP has agreed to a settlement of a class action lawsuit brought to recover lost profits and property damage resulting from the spill.  To qualify for this settlement, a company must be located in a broad geographic area in the southeastern United States (“eligible area”), not be an excluded industry, and show a minimum decrease in 2010 and a subsequent minimum increase in gross revenues in 2011 (“Vtest”).  There is no requirement to directly link the decrease in revenues to the oil spill, and there is no cap on the amount of damages BP will pay.  Companies that qualify can file claims until April 2014.  True Partners Consulting, in coordination with another consulting firm that is an expert in the field, can help companies analyze their revenues to determine whether they meet these requirements and assist in preparing and filing their claim.

 
Geographic Area
 
The geographic area of the settlement includes all of Louisiana, Mississippi, and Alabama, as well as all Florida counties that border the Gulf of Mexico, some counties in northwest Florida that do not border the Gulf, and five Texas counties on the Gulf Coast.  Any company that is not in an excluded industry and that is located or has facilities in the claim zone, is eligible for the settlement if their gross revenues meet the Vtest.  
 
Lost Gross Revenue Test
 
The test for lost gross revenue is known as the “Vtest” because it requires a minimum decrease in 2010 monthly revenues and a subsequent minimum recovery in 2011 monthly gross revenue.  In order to determine if a company meets the Vtest, we would need to examine monthly gross revenues for 2007 to 2011 for each of the company’s locations/facilities in the claim zone.  We will analyze the gross revenue data to determine if a business is eligible for a claim.  There is a great deal of flexibility in selecting the three-month period and the prior year periods for the Vtest.  Therefore, there may be an opportunity for a claim that is not immediately identifiable based on a cursory review of the financial statements.  We have seen situations where a company’s total annual revenue increased every year from 2007 through 2011, but it still qualified to file a claim.
 
If the company does not meet the Vtest, it may still have an opportunity to file a claim under the “Decline Only” or modified V causation standards.  These causation standards require additional information from the company related to its customer base and business factors. 
 
Once a company is determined to be eligible for a claim through the Vtest or other criteria, additional information will be required to calculate its damages, e.g., prior tax returns and additional financial information.  
 
There are certain industries that are precluded from the settlement.  These include, but are not limited to, gaming, financial institutions, portfolio management, insurance, real estate development, and defense contracting.
 
Our Expertise
 
With very limited information, True Partners Consulting can first determine whether or not your company qualifies for a claim.  Once we determine your eligibility, additional information will be analyzed in connection with preparing the claim. 
 
If you believe any part of your company’s operations may be in the effected geographic zone, please contact one of our professionals immediately to learn more about whether your company may be eligible to file a claim.
 
Ross Valenza
813.434.4002
Ross.Valenza@TPCtax.com
 
Stanley Jozefiak
312.235.3306
Stanley.Jozefiak@TPCtax.com
 
Ryan Kittner
813.434.4003
Ryan.Kittner@TPCtax.com
 
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