case for today which is two thousand and eighteen three zero two six zero eight consolidated with two thousand eight hundred three two six non and three zero zero two seven zero and three zero two seven one your honour's the deepwater horizon oil spill was an april two thousand and ten jamey filed a claim for a discrete limited compensation period window may through december of two thousand and ten and the district court hel a transfer of j m d's operations to gulf blue in june of two thousand and eleven over a year after the oil spill and six months after the end of the compensation period means that j m e must be treated as quote a failed business and quote for purposes of that compensation period that happened six months before the transition your honour's the settlement does not require thess result now the main review of the meaning of the terms so what does the settlement mean and when it comes to the definition of liquidation the your honour's the settlement used the word liquidation it didn't use the word sell him use the word dispose of it didn't use the word transition ownership of this carefully negotiated document uses the word liquidation and so the question becomes what is the plain in ordinary meaning of that word as used in this context now the first clue or textual clue that i've asked the court to examine tab twenty six of our record x serps page five paragraph eight talks about the sort of documentation that for failed businesses that they have to submit and one of those is evidence of any asset sales including a description of each asset and the corresponding sales prices and evidence of any payments of liquidation proceeds in satisfaction of debt and or other creditor obligations in other words one of the pieces of evidence that the claims administrator is supposed to review is whether or not sale proceeds are being used to pay off debts and liabilities your honour's beatty's approach to the meaning of the word liquidation and the district courts approach to the meaning of liquidation makes that documentation requirement entirely irrelevant what's the point of examining whether or not liquidation proceeds are being used to pay off debts if it really doesn't matter in the first place and this fits exactly with the definitions that we submitted in our brief and that we have argued all along throughout this process black's law dictionary defines liquidation as the act or process of converting assets into cash especially to settled that that especially is key that's the difference between the piece approach merely selling assets in j m e s and the question is whether or not the plane an ordinary meaning of liquidation is used in the context of this settlement means the the especially the part and your hon but it's not a failed business under the first definition in the third definition more problematic for you so in other words the liquidation catchall your honor  yes i believe that's where the crux of the dispute between jamie and b p is going the first definition a more well it it's not wind down i think it's very clear that there was not where where the crux of the fight comes down and it matters whether it means pay off debt yes your honor or be used to invest in new assets absolutely and i think your question judge all right goes to the absurdity of b p s position if all that liquidation means is selling off assets without regard to the broader business context even though these definitions allow you to look at the broader business context th suppose a to risk business their main asset is a boss and they want to upgrade from one bus to another bus so they sell the bus they have thus sold their assets b p in order to fund the new boss b p s definition gives no way to distinguish that situation an ongoing growing business that sells assets in order to transition to new assets it gives no way to distinguish between the two of them that that result doesn't fit with the purpose and intent of the settlement agreement and that the same reasoning applies to jamie so mr smith your first argument is that it's not it didn't even liquidate during the or didn't sell off not technically two separate arguments the first is a factual observation that the truth is that the text of the settlement makes the relevant period for testing whether or not there's a failed business through the end of two thousand and eleven so we do consider the june event correct in the question is whether or not that is a liquidation and when there when the text of the definitions we presented at least five different definitions in our opening brief black's law dictionary m webster's collegiate dictionary the new oxford american dictionary and the list goes on on and on these dictionaries indicate that the plane in ordinary meaning of the word liquidation can include looking at the broader business context to see whether or not it's being done to pay off that's why abilities and there's absolutely no evidence of that here the undisputed facts are that the reason for this transition was simply so that jamie could transfer ownership of it's ongoing successful business to two from the owner to the owner and his family the owner of jamie retained an ownership interest in golf blue indeed gough blue continued to do business as j m e after the sale occurred so in other words to the broader world that's the interfacing with jamie there was no change at all to the customers and all of that for all intents and purposes except for this on paper technicality it was the same business so our client is caught in a technicality created by the district court that says that because they they transition to ownership as part of an estate planning deal in june two thousand and eleven instead of waiting till say january first of two thousand and twelve they have to lose out on significant aspects of the settlement compensation formula that was designed exactly for businesses like me that operate along the gulf coast dury for tourists and the like there's no dispute that a tourist business on the gulf coast suffered significant losses following the oil spill and there's been no challenge at all to jamie's calculations or its claims other than this argument that somehow it's a failed business so going back to the reasons to hold that liquidation has in the element that considers whether or not the proceeds are used to pay off debt the first reason is the taxed the definitions support that and as well as the fact that the text requires the claims administrator to evaluate whether or not the proceeds of the sale are being used to pay off debts the second is just the fact that b p s position leads to an absurd result it means that claimants lose out just because they decide to do efficient business transactions because they decide to upgrade their main asset from one asset to another definition of liquidation is over inclusive when it comes to this context and finally this is an eminently workable situation first the text requires the claims administrator to be evaluating this this type of data this court and b p has argued time and again that in other contexts the claims administrator needs to be looking at the facts and circumstances surrounding parties of discretion but here we're simply evaluating whether or not the district court accurately interpreted and applied the settlement agreement that's a question of law regarding the meaning of the settlement agreement and something that this and i think directs the court to its decision last fall in nine ten fed third seven nine seven and that was admitted lee a different context regarding the settlement assume one of the site that this decision has come out since the briefing so right but you didn't file a twenty eight day or anything correct well and have you mentioned it to the posing counsel this morning before you started that you were going to be starting a new case no your honor ok well the better practice is to file a twenty eight day so that the opposing counsel can respond  the court said that the claims administrator should quote look beyond mere labeling and quote to the substance of claims to decide and that context fixed or variable expenses whether or not they actually are what the parties say they are and there's and there are appeal panels going both ways on this is that correct i believe that there are some older appeals panels that may have gone the other way but the majority of the recent opinions have followed the final point that i'd like to make is the e p a has talked about crystal seafood and the court's decision in that case that case does not control the definition of liquidation for several reasons first of all that case simply concerned with the claimant that was backtracking on its tax statements its one tax statements that were filed with the claims of mr eight or and when it tried to create a fact issue by submitting  controvert an affidavit in this court said that that didn't work to create a fact issue that they had this is something you've made up after the fact or didn't keep your books in orderly you've taken a consistent position throughout about what the purpose of the liquidation was yes or no yes your honor and so all that being said jamie was an ongoing successful business merely decided to transfer ownership for purposes of  family and estate planning and it was not a liquidation within the plane in ordinary meaning of the term is used in this document and there are two questions that i think it be helpful if b p could answer in their time because they didn't address them in their brief in the first is how does their definition of liquidation merely converting assets into cash how does that better fit with the context of the settlement agreement and the plain meaning of the rest of the document and the second your honor is why what what dictionary are the even offering to support their approach in their brief eight they offered no support whatsoever for their current definition and if the plane an ordinary meaning is what controls would ask the court to look at the plain ordinary meaning thank you thank you we have your argument and you've said time for a bottle mr curtis yes and together with my colleague andrew bergman we represent the b p entities the a poet he's here as a talent has framed the issue in this case the question is whether the settlement agreement the existing document whether the definition there of failed business should apply to successful businesses that reorganize somehow by transferring their assets their ongoing enterprise from one corporate entity to another that's their phrasing of the issue and i don't run from it the answer is yes that's exactly how it's meant to be applied if we were discussing the concept of a failure in the abstract we might have an argument there may be some traction given the circumstances that happened here but we're not dealing with the concept of failure in the abstract whether moral failure financial failure or any other kind of failure in the abstract rather we are talking about a defined term in a contract and the defined term is a failed business it's not hanging out there without any guidance it is in the context of a much broader agreement and it is defined according to the sub parts that you've seen as i prepared for this case and as i prepare for oral argument i found that having the definition next to me helped which is why i had the clerk leave in your chair the two pages that are excerpts from exhibit six to the settlement agreement where failed businesses are defined are you relying on one or three  oath both for sure i think it's clearly falls within both if and you know the overarching theme here is basically three fold the definition of failed business does apply to the facts here because that's what the settlement agreement says and we can go through that it does apply here because prior cases in this court have agreed that on fact factually similar scenarios where entities have transferred operating f operating assets from one entity to another entity even if they were closely held even if they were related but that is still treated as a quote unquote defined term failed business because the focus is on the entity that is making the claim and to understand that as well much of the case law that arises in this in the b p settlement agreement context is of a similar ilk if you have any other cases that we've cited that you think we i think would help us here adams produce is the was in the same situation as the graphic packaging it was to the extent that there was one entity that transferred operating assets to a different entity no i'm talking about that the quick if used to look at it the district court remind me to remind the court place it did that was this one where they were denied review and we did we said that's fine with their business and buy other hotels that are not on the beach side so they sell off all the hotels that are on the beach side but they're keeping all their capital to buy look for good hotels across the street still going to name the hotels the same name and all of that sort of thing probably or have the same boring and at least are you saying those are failed businesses no not necessarily that different significantly the entity that is i mean i do i think there'd be a fair argument there that it could be but i think that would be a harder factual determination and it would depend on but if you went according to  the definition i think there'd be a fair argument that was not a field business because first of all it didn't seize operation well first of all the entity continued in operation secondly the entity did not cease operations the entity did not wind down what do you mean did not see separate it was not it has no hotels it's not that in my hypo there at those hotels i got blown away so they did and they're now in the scouting it out the reason that that would i think not be a failed business is because the entity continued to try to generate revenues well that's basically under my in my sense the entity continues to exist the first definition for failed businesses whether it ceased operations and if you're telling me that instead of taking proceeds and settling debts and going home and just winding down that instead what they did was continue to try to offer hotel services in that area or another area that entity has not ceased operations it suffered losses the losses would be profound and they could be measured based on presumably if the hotels were washed away revenues that were evaluated prior to th revenues after the spill but it's the same entity and those losses as they try to rebuild hospitality and hotel in that area are our losses that are attributable to the spill and it's an ongoing uncertain risk about how that will be continued to be affected and that's what the risk transfer premium is four by contrast and i've said there are three overarching things one is the language second is that there are cases here admittedly unpublished opinions that have scenario the third is that if you scratch the surface of the facts here even a little bit you find that the whole notion that there is some big misunderstanding about what happened here and what terms apply is it says that purchaser is purchasing substantially all of the assets of the ongoing business operated by seller and then there is an exclusion but literally the exclusion is for wall hangings and personal furniture in the office of mr andrews the contract itself makes it clear that one entity sold substantially all of its assets to another entity i might also add that they added that it was going to continue to be an ongoing entity and this is an extent planning vehicle and any of that i know i think it doesn't matter because the focus is on whether or not i mean another another case in that crystal seafoods does again that's in the context of the case where there was a fraudulent at test ation that something was not a failed business when it should have been recognised as a failed business but one of the things that the court there recognised is that in the framework of the business economic loss compensation scheme in the settlement agreement basically that creates a binary system you either have what they termed ongoing businesses or failed businesses and again that's not a distinction that determines whether or not compensation is available it's simply a determination about how compensation is calculated and in the case of i'm going businesses which is the straightforward be e l framework you know there are at least two significant logical reasons why that would be set aside as one category and that is if rev if it revenue generating operations are continuing or being undertaken then you can measure damages by looking at preschool revenues that were generated and postville revenues that were generated and secondly it does apply a risk transfer premium which is an acknowledgement within the settlement agreement itself that a future stream of income has risks associated with it and therefore there is a built in compensation is that precise is it mathematical or scientific in any given case no it's actually quite a blunt instrument that gets applied based on industries and locations but that was what the agreement settled on if you're going to have ongoing revenues into the indefinite future then you've got to risk transfer premium by contrast a quote unquote failed business and again that's not a moral judgment it's just a something that fits the definition that's in exhibit six that you have in front of you that is a business that has ceased operations by by the definition it has ceased operations and wound down what does wound down like to it is as i think all parties agree a process it is a process of slowing down of coming to some measure of closure there is nothing and it can take many years that's that's been acknowledged by the appellant in this case there's nothing in the definition here that says that the the to be a failed business the entity must have ceased operations and completely have wound down or be completely wound down rather during the period it needs to have ceased operations and wound down not necessarily to completion i would argue that it's is compelling or frankly much more compelling to say that needs to begin the process of winding down but there's no requirement that it be completed indeed there's citations to cases where it takes three four five years to wind down some corporations and yet the period allowing that to happen is about twenty months under the settlement agreement if you construe it the way they do it doesn't make any sense well i think it is whether or not it's do they stop operations or they transfer operations because the corporate relationships actually matter here you know that i'm not a specialist in every aspect of the settlement agreement but a company can decide whether or not it wants to make one consolidated claim for all of its facilities and to get in the region or whether it wants to file specific claims for different for the case so it matters about the parent relationship and i i think i think that just complicates things is all i'm saying i don't actually think that if you have a corporate entity and if that large corporate entity has subsidiaries  transfers things internally but it still makes a corporate claim i think that it is an ongoing business its continued its operations through its holding structures and through its various facilities and it has revenue you know it hope it has hopes for revenue in the future because it's continuing operations if viewed in a consolidated way it's not a failed business if on the other hand it just sells the remnants or the you know whatever's left to another hotel chain all together separately and we certainly can skip over the second little eye here for bankruptcy because that was in a place but we haven't touched too much on the liquidation except so the definition also includes otherwise initiated or completed a liquidation of substantially all of its debt here's what i would like you to go back and read in all of those definitions because i've done it if one is talking about how to define liquidation of an entity it means selling off assets of the entity in order to i mean like that can be the preferred definition that is not what we have here we have a completely different verbal formulation it is a question of whether the entity completed a liquidation of its assets so to liquidate an entity and using i don't administrator the appeals panels that have reviewed this in the district court who reviewed it agreed that by liquidating substantially all of its assets by selling substantially all of its assets remember the searches and sale agreements had purchasers purchasing substantially all the assets of the ongoing business that this company whatever its plans in the near term or long term in terms of settling all of its debts is no longer an operation it's ceased operations and it needs to be treated and then evaluated as a failed business and it is important to note that being evaluated as a failed business does not mean you're a loser and you don't get compensation it just means that in recognition of the different situation that an ongoing business business that ceased operations faces you need to do a different calculation for damages that was not a beneficial calculation in this transaction on these facts for this claimant that doesn't mean that the  settlement agreement was misapplied here it just means that under the formula that applied to a business that ceased operations and was winding down and had sold a substantially all of its assets liquidated all of its substantially all of its assets that the measure was to look at the total enterprise value before versus the liquidation value and of course in assessing that liquidation value you will look at whether or not debts were paid that was something that the program would look at to assess the overall measure of potential loss but it's not a necessary condition that there be a settlement of debts in order to qualify as a failed business and to get into that that rubric and that form of damage compensation measurement thank you do you have anything else i really think i don't if the court doesn't have anything further i appreciate your time thank you very much we have an argument do you have anything for a battle tense than winding down and this is a carefully negotiated settlement and skilled lawyers lots was on the line they chose the word wound down and then they put a deadline the end of two thousand and eleven so that's the deadline by which being wound down needs to happen that that's the tax the settlement that's that's what it means so that's my first point on rebuttal and two other points your honor b p suggested that applying the normal compensation framework isn't it reasonable for jay and me talking about the risk transfer premium and all of that your honour's jamie did generate revenues during the entire compensation periods compensation period was two thousand and ten didn't sell the business until later so the suggestion that it doesn't fit because revenues weren't being generated doesn't work as for the risk transfer of premium it's a multiplier this supposed to compensate for quote damages or losses not currently known which may later manifest themselves and in this case when you're selling damaged goods or goods that might risk being damaged to this bill that's the precise sort of loss that the risks transfer premium was supposed to capture all of these having to sell damaged goods or damaged business that's what the risk transfer premium captures as well as the risk that maybe the notes or whatever part of that transaction might not be able to be fully paid off due to the continuing repercussions of the spill that's exactly what that compensation portion was for and the final point that i would like to make is this distinction between liquidating an entity and liquidating assets your honour's the settlement talks about liquidating assets in the context of a business failure and the dictionary definitions that we have cited are talking about liquidating assets for a particular purpose to settle that's black's law dictionary doesn't talk about liquidating  nity it says the actor process of converting assets into cash especially to settle debts that fits this context exactly and that is not what jamie did the other definitions reinforce the same point what do you say to the argument that it's not entity is not the object in that same way liquidate an entity right so the question is whether or not assets are being liquidated i agree with that but what does it mean to liquidate assets and black's law dictionary tells us that when assets are the object liquidating the assets it still means to settle that it's so when when assets are the object that the the claim is at the end of the existing at the time of the spill or the success around it in that case said that the entity in existence at the time of this bill is the one who should file the claim that's exactly what jamie did here it's was an ongoing business it didn't fail there were no signs of financial distress and we believe that the regular compensation framework should apply unless there are any further questions that is jamie's position we have no argument this case the arguments today were very helpful thank you