BP’s Spill Fund Lifts Payout Freeze After Court Clarifies Order

A fund set up by BP Plc (BP/) to compensate victims of the worst U.S. oil spill said it lifted a freeze on payments to victims after receiving a clarification on a court order to set aside money to cover plaintiffs’ legal fees.

The Gulf Coast Claims Facility said yesterday that it had “temporarily frozen all payments to claimants” after the court in Louisiana overseeing litigation said in a Dec. 28 order that the fund should withhold 6 percent of payments for the fees. The facility stopped payments on Dec. 30 while seeking “a confirmation of its interpretation of the order,” prior to beginning the withholding process, David Pitofsky, a lawyer representing the fund, wrote in a letter posted on the GCCF website.

“The GCCF has received oral clarification from the United States District Court for the Eastern District of Louisiana,” which is overseeing the litigation, the fund said today in an e-mail. “Effective immediately the GCCF will resume payment to eligible claimants.”

U.S. District Judge Carl Barbier, who is overseeing the litigation, said in a court filing today that the 6 percent holdback should only be applied to “claimants who were not issued a payment determination letter” from the fund as of Dec. 30 and doesn’t apply to payments made before or on that date.

BP had paid $7.4 billion to individuals, businesses and government entities affected by the oil spill by Dec. 23, the company said on its website. It’s setting aside $20 billion for victims and to pay for environmental damage after the disaster in the Gulf of Mexico in 2010.

David Nicholas, a spokesman for London-based BP, declined to comment on the decision, saying it was a matter for the fund.

The lawsuits are combined in In re Oil Spill by the Oil Rig Deepwater Horizon in the Gulf of Mexico on April 20, 2010, MDL- 2179, U.S. District Court, Eastern District of Louisiana (New Orleans).

To contact the reporters on this story: Margaret Cronin Fisk in Detroit at mcfisk@bloomberg.net; Brian Swint in London at bswint@bloomberg.net

To contact the editors responsible for this story: Michael Hytha at mhytha@bloomberg.net; Will Kennedy at wkennedy3@bloomberg.net

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