Monday, July 12, 2010

BP (NYSE:BP), Feinberg Want Immediate and Final Settlements

Ken Feinberg says the $20 billion BP (NYSE:BP) or Gulf Coast Escrow Fund, which he will be administering, has the goal of ending each case they deal with when it happens. "We're not interested in any halfway measures," said Feinberg.

How that'll work in the view of Feinberg will be to withhold distributing funds unless the claimant agrees to finalizing a deal. In other words, no back pay unless they make a deal for an estimate on future damages as well, right on the spot.

What that does is release BP from any future claims by the one filing it. This could be one of the reasons for the fund to be limited to a four-year period, as it would go on indefinitely if final agreements weren't found.

This is a risk on the side of BP and the claimants, as no one knows what the future holds, and it could be a better deal for one or another depending on the outcomes.

What will probably happen is some individuals and businesses will win in some cases, while BP will win in other instances; which should balance things out in the long run for BP.

Other options for claimants would be to use the Oil Pollution Act of 1990 (OPA) fund, which is considered more risky, and only deals with proven and past damages, which means claimants would have to come back over and over again if new damages emerge.

The other problem is its only funded with about $1 billion, which wouldn't be close to handling the amount of claims out there.

One other option would be to sue BP directly, which all of us know in cases like these, could take years to litigate.

Bottom line it seems in the matter, is Feinberg is setting it up for the escrow account of BP to be the fastest and safest way to take care of the damages.

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