Image by cayobo via FlickrKenneth Feinberg has been assigned the responsibilities of overseeing the $20 million fund that oil giant is likely to pay as compensation to the victims of the oil spill disaster off the gulf coast
What is an escrow fund?
The money is put into an escrow account to ensure that an amount will handle oil spill claims. BP does not have access to the money once it has been released the US Government.
Where does the $20 billion go?
The escrow fund will be handled by an Independent Claims Facility (ICF), designed for claims of individuals and businesses who have been harmed by the oil spill. The Fund will be used to pay claims decided by the Independent Claims Facility. Expect natural resource damage costs and state and local response costs to be pulled from the Fund.
Is the $20 billion accessible now?
Not by any stretch. BP must pay $5 billion per year over the course of four years at a minimum. The company will make initial payments into the escrow fund of $3 billion this summer and $2 billion in the fall, followed by $1.25 billion per quarter until the $20 billion figure is reached.
Does the Fund limit BP's liability?
It does not. If paid claims are more than the commitment, BP is on the hook
How does a claimant receive money from the fund?
No specifics yet. The claims process will be hands off for BP. Claims denials are reviewed by a three-judge panel. BP can only appeal claims exceeding $500,000.
Expect more details in July.