How Will Mr. Feinberg Compensate Victims For Businesses Bankrupted By The Spill?


Anger and frustration surrounding the Feinberg claims process is boiling over. The number of denied claims is soaring (particularly in Alabama). And many of the claims that have been paid are for mere pennies on the dollar. Gulf residents are being forced to shutter a range of businesses from hair salons to seafood processors to laundromats to restaurants to cleaning services. The list of fatalities is long – and getting longer.

So what about those businesses forced to close because of the old-and-slow BP claims process or Kenneth Feinberg’s new-and-slow (and low) claims process? Many folks down here believe that BP may have jumped out of the short-term payment frying pan and into the “you just bought my business” fire.

The idea is that damages have, thus far, only focused on revenue lost to the spill. But what if the spill forces a business to close for good? Then isn’t the damage really the value of that business before the spill? And doesn’t that open up BP and Mr. Feinberg to investigations into exactly why the claims process failed so many?

Such answers, of course, would prove very interesting because precious few details of the inner workings of the process are being made public. A court procedure might shine some sunlight onto those life-changing decisions.

This kind of liability is something lawyers think about, but it’s beginning to loom large as a real political question for Mr. Feinberg, and by association, the Obama Administration. For one thing, determining pre-spill business values might actually be easier than documenting lost revenues – after all, every industry has fairly set formulas for valuing businesses on revenues or net profits.

Many are suggesting that – by embracing a strategy of delay, delay, delay – BP may have greatly increased its liability. And that means those of us who were already worried that the $20 billion BP has “committed” to make things right won’t be nearly enough. It’s an issue worth watching closely.

© Smith Stag, LLC 2010 – All Rights Reserved

1 comment

  • yes it is real and we are on the brink of bankruptcy both personally and in our business which is a dive shop and completely dependent on the Gulf and fishing.
    Mr. Feinberg’s organization has delayed and delayed our claims with no explanations or communications other than form letters. They ignore all our phone calls and emails and only send the same form letters.

    They have mixed up our loss of income claim information with our loss of property claim status and information and still just respond with form letters by mail and email telling us to call if we have questions or email and that we can find updated status online which is wrong.
    I have been straight forward with them and expressed our dire need for funds but to no avail they just don’t care and I think they want to delay claims to keep their jobs longer and hope to have money left to send to the government.
    Something is very wrong here and I think Mr. Feinberg being appointed by the Administration must be getting some kickbacks if he ends up with a surplus for the government to take. The people be damned.

Stuart H. Smith is an attorney based in New Orleans fighting major oil companies and other polluters.
Cooper Law Firm

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