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MAS Advisory - Recent Environmental Disaster: April 2010 Gulf of Mexico Oil Spill

Tuesday, July 06, 2010 - Tony Argiz, CPA/ABV/CFF, ASA, CVA, CFE & Marta Alfonso, CPA/CFF, JD

 

Tony Argiz
  • Tony Argiz
  • CPA / ABV / CFF, ASA,
  • CVA, CFE,
  • CEO and Managing Partner
  • targiz@mbafcpa.com
  • (305) 373-5500
Stuart Rosenberg

April 2010 will long be remembered by those who experienced tragic economic losses from the ongoing oil spill in the Gulf of Mexico. The ecological disaster harmed, among others, individuals, privately-owned businesses, small and medium sized companies, financial institutions, and municipalities. We have received numerous requests for advice on how to recover from these devastating and overwhelming losses and, as business advisors, we would like to share our initial insights as to how to address such an economic tragedy. While we acknowledge the difficult environment that the oil spill victims are facing, taking proactive actions affords the best options to lay the foundations for possible recovery from this disaster. Here are some actions we recommend:

  1. Gather information and seek professional advice to prepare you to explore alternatives for recovery from economic losses.

    If you have suffered an economic loss, you have several alternatives in pursuing recoveries, including:
    • Filing insurance claims;
    • Pursing state or federal court actions; and
    • Filing claims against the $20 billion national escrow fund established to pay for damages and losses arising from the ongoing oil spill in the Gulf of Mexico. It is expected that the procedures for filing claims will be released shortly by the Paymaster Kenneth Feinberg.

Gathering complete information and seeking professional advice is critical in identifying choices among the alternatives available to victims. This information includes related risks, benefits, costs, and timeframes for recovery.

  1. Compile available information about the claimant's economic history.

    This information should include, at a minimum, the last three years of information, where available:
    • For individuals: bank statements, federal and state tax returns, listings of assets, personal financial statements, relevant insurance policies, evidence of employment, evidence of personal residency, and W-2 statements and 1099s.
    • For companies or municipalities: bank statements, federal and state tax returns, listings of assets, monthly and annual financial statements, relevant insurance policies, and relevant operating and industry performance statistics.
  2. Compile information about economic damages and losses.
    This information should include evidence of economic damages and losses since April 20, 2010, including evidence of physical property damage and economic loss (including current period bank statements, reservation terminations, cash receipts, and other information after the oil spill on April 20, 2010). Also compile information about current economic status, including new personal or corporate loans, sources of government assistance, such as unemployment insurance proceeds or food stamps, asset sales, or other financial restructuring events, including loan defaults or bankruptcy filings.

  3. Establish a personal and/or corporate cash management plan for the next 18 months
    1. Determine a monthly cash outlay budget, detailing planned expenditures and debt repayments. Include a provision for a contingency cash outlay each month.

    2. Identify potential and viable sources of cash inflows for each month.

    3. Identify monthly cash deficits.

    4. Develop a resource and action plan to resolve the monthly cash deficits. Ideally, this plan should not anticipate any recoveries from economic loss claims as recoveries may take an extended period of time.

    5. Begin to work the plan to obtain the needed liquidity for the next 18 months, including contacting affected creditors.

    6. Consult professional advisors, where necessary develop a realistic survival program tailored to your circumstances.

    MBAF's professionals are here to help. We specialize in economic damages, business valuations, forensic accounting, or business consulting and are available to assist you or your other professionals in:

    • Preparing economic claims submissions for insurance companies or a national claims process;

    • Preparing expert reports on economic damages for litigation or claims submission;

    • Preparing your cash management plans; and

    • Helping you to identify and pursue alternatives to achieve your cash management and financial plans.

MBAF is the largest independent accounting firm in the state of Florida and 43rd in the nation. MBAF is independently ranked as one of the TOP CPA Firms in Litigation Support in the region by leading South Florida attorneys.

Our professionals are experienced in preparing business continuity claims, economic damage models, business valuations and providing forensic accounting services and business advice including insolvency situations. We thoughtfully evaluate financial and business information to compute economic damages and losses and prepare claims. Many of our professionals are Certified Fraud Examiners, Certified in Financial Forensics, Accredited in Business Valuations or are Certified Valuation Analysts. Our expert witnesses are experienced in various forums of testimony including state and federal courts, arbitration panels and mediation.

With experienced financial restructuring, insolvency, and tax professionals, we can assist in identifying achievable financial alternatives for an individual or corporation to weather the remaining storm resulting from the Gulf of Mexico disaster. In our 40 years of operation, we have had years of experience in dealing with unforeseen financial impacts for our clients. Call MBAF for an appointment to discuss your questions and concerns. In these times of crisis, MBAF stands prepared to support you.

If we can be of help to your friends or clients, please contact Tony Argiz, CEO and Managing Partner or Marta Alfonso, Partner at 1-800-239-1474.