The BP Recovery Fund (Fund) has just announced that financial institutions will now be eligible to receive funds for losses in the Gulf Coast area, but they must file a Notice of Intent to File Claim (Notice) by January 17, 2013. Financial institutions wanting to file a claim are assured of anonymity in filing any claim for recovery, as the federal judge has executed a confidentiality order that prohibits information about any claimant from being known by the public. Essentially, any financial institution with offices, branches or service centers located in the Gulf Coast area (all of Alabama, Mississippi, Louisiana, Florida panhandle, west coast of Florida, Florida Keys and the four southeastern counties of Texas-Beaumont and Galveston) that can demonstrate a decline in gross revenue between May and December 2010 compared to 2009 is eligible for recovery from the Fund. This loss can be a decline in deposits, payments on loans, or breaches of loan documents occurring between May and December 2010. The Fund administrator and our law firm are the only parties who will know that a claim is being submitted and awarded. Roetzel has experience with over 1,000 claims and has in place a process to file the Notice and submit and secure claims for our financial institution clients.
The Deepwater Horizon (BP) explosion occurred April 20, 2010. Initially, the Obama administration convinced BP to set up a $20 billion reserve, administered by the Gulf Coast Claims Facility, which was owned and managed by BP. The initial claims administrator was highly criticized for denying claims without reason, so a class action was soon filed, and as mentioned above, recently settled. It received final approval from the U.S. District Court for the Eastern District of Louisiana last month. Pursuant to the settlement, a new Fund administrator has been put in place. The Fund is court-supervised and the new administrator is a plaintiff's lawyer. BP has no cap on what they must pay, but have initially deposited another $20 billion into this Fund. Any recovery from the Fund is analyzed on an individual facility basis and on a monthly, not annual, basis. This allows the most flexibility in maximizing a company's award. The awards are very large because there is a two-step process for calculating damages, as well as a stacked multiplier that is referred to as a risk transfer premium (RTP). The RTPs are generally 2.0-2.5; however, this number is misleading because it is a "stacked multiplier." For example, if a facility realizes a decline of $100,000 and is located in Zone C, their RTP is 2.0 and their award is $300,000. The calculation is as follows: $100,000 + ($100,000 x 2.0) = $300,000.
The settlement agreement is a 2000 page document and while this Alert is a very simplified summary of the settlement agreement and the benefits of making a claim, it gives a realistic view of the potential awards per facility. There are over 63 formulas to allow for eligibility and recovery from the Fund.