Businesses and the BP Settlement
The BP Settlement is coming up in just less than a month’s time now and will completely transform the whole GCCF methodology system to a better, fairer and more transparent system currently known as the, “Court Supervised Claims Program.” The new system will not be as autonomous as it was under Feinberg because there will be much more judicial supervision under the new BP Settlement. If you happen to be a business owner, the BP Settlement will be able to pay you, even if you have been paid under the GCCF. We will discuss qualified Claimants, the part of business income that is awarded and how the new Risk Transfer Premium (RTP) may pay out to you, even if you were previously denied.
We must discuss who can get paid, in the first place. So far, the BP Settlement has listed potentially non-payable classes, which we will list. If you belong to one of these groups, you will NOT get paid under the BP Settlement:
BP Settlement Exclusions
1. Financial Institutions: These will most likely include mortgage firms, accounting firms, banks, financial advisories, stock brokerages, etc.
2. Casinos and Racetracks: this is self-explanatory. These were paid at one time, but will not be paid under the BP Settlement. There is somewhat of a give-and-take negotiation going on with the BP Settlement. On one side, businesses that did not qualify under the GCCF Methodology, will comply under the BP Settlement, and vice versa. Arguably, more businesses will get paid under the BP Settlement, even though some classes may be excluded, that were not excluded before. Keep in mind that the negotiations are not complete and that some of these policies are subject to change.
3. Oil & Gas Industry: these will include the rig contractors, drillers and processors of this industry.
4. Insurance Companies: This is self-explanatory.
5. Defense Contractors: This is self-explanatory. So, companies like Lockhead Martin, Northrop Grumman and smaller contractors will not get paid. The justification is that a defense contractor’s income is generated, or lost, by government actions and not by the BP Spill of 4/20/10.
6. Moratorium Claims: Basically, this reverts back to the Oil & Gas Industry businesses that will be denied. There is a possibility that, with our influence, some Moratorium Claims may be paid. Such businesses may include catering businesses that suffered from the interference of business caused by BP’s Spill. So, companies that directly profit from oil and gas will NOT get paid under the BP Settlement, but auxiliary companies that serve the oil and gas companies have a possibility of getting paid. Not all is lost for Moratorium Claims.
After listing the businesses that WILL NOT get paid, you must be wondering WHO WILL get paid under the BP Settlement. So, let’s start with this,
The BP Settlement will Compensate any Business affected by the Gulf Oil Spill Based on Proximity to the Gulf and Industry.
“Any [business] that asserts it had an economic loss.” Common sense would dictate that certain limits will most likely apply, but the RTP will open many doors for businesses who could not get paid before. The RTP will be a multiplier, between 0.1- up to 5.0 and will be applied to your business type and locale to the Affected Areas. The ‘Affected Areas’ will be the areas within 0.5 miles from the beaches actually soiled by BP’s oil. If you are a business that directly depends on the Gulf Resources of seafood and tourism, and you are located on the beach, your multiplier should be at its highest. If you show an indirect dependency on tourism and/or, but are located on the beach, then your multiplier will tick downwards. If you show an indirect dependency on a Gulf Resource, and you are located off the beach, then your multiplier will be even lower. At the very least, if you are not in the excluded categories, you have a chance of getting paid.
What business figure gets paid? The BP Settlement will be OPA (Oil Pollution Act) driven. The OPA only allows for the Gross Profits figure to be reimbursed. So, when calculating your loss, do not use your potentially lost, total sales figure, that amount will not get reimbursed. “I lost $100,000 in business,” will not get awarded. “I lost $50,000 in gross profits from $100,000 in lost, total sales.” The $50,000, times your BP Settlement multiplier, will get reimbursed.
Gross profits, remember, are you Net Sales minus Cost of Goods. So, say you sell fried grouper sandwiches on the beach, in Perdido Beach, Alabama at your seafood restaurant. Obviously, you rely upon the Gulf grouper to make your product and you rely on the New Englanders to come down to the area to buy them. Let’s say you sell the sandwich for $9.00. The hoagie bun costs $0.50, the toppings are $1.00, the corn oil about $0.10 and the grouper cost you $3.00. You have a total cost of goods of $4.60. Notice, utilities and rent/mortgage are not included in the calculation. You have a profit, 9.00-4.60, of $4.40, a margin of 48.88%. This is pretty direct and the BP Settlement should apply a similar standard. Considering the GCCF Methodology worked out a magical LOI% that nobody knew how to calculate, this is an improvement. Back to the task at hand, under the OPA and BP Settlement, only the $4.40 will be reimbursed, NOT the $9.00. But wait, what about the multiplier? Your Gross Profit is $4.40, you are right on the beach, there was oil on your beach and the whole area was a ghost town during season. Let’s make this argument here: you did not catch the grouper, so your multiplier ticks downward. You are on the beach and you have local customers in addition to tourist-customers. You do not ENTIRELY rely upon tourists ONLY, so your multiplier will tick down again. Let’s say your multiplier is dropped from 5.0, tick down to 4.5, then again to 4.0. Your $4.40 will be multiplied by 4 to equal $17.60. Does that make a bit more sense?
BP Settlement may Shift
Please keep in mind that the BP Settlement is not complete and is still in its negotiations process. We cannot be certain how the multiplier will work as those details have not been worked out. We do know that the RTP will most likely exist and will work in a similar fashion described above. However, it is not possible to be specific. At the very least, we can see that the BP Settlement will be more transparent than the GCCF system and the calculations will make sense to us all. The BP Settlement will be an improvement, not a perfection, of the reimbursement system.
Stay tuned, keep checking this site, we will keep releasing news as it unfolds. We are here to help guide you through the BP Settlement and its process soon to be released. Thank you for reading.
We will help you with Your BP Settlement