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What Can I Claim For The Loss the Dixie Fire Caused My Restaurant?

August 24, 2021 Posted In

The Dixie Fire reached Greenville on August 4th and destroyed the commercial district at the heart of the town center.  In all, the Dixie Fire destroyed 131 businesses.

Many PG&E wildfire survivors ask us about their legal claim for damages to their business. A damaged restaurant may assert many of the same claims as an individual. For example, restaurants can make claims for physical damage to real estate, structures, and tangible property

However, restaurants and other businesses have additional legal claims.

  • Damaged or Destroyed Inventory. Damage from smoke and flames can render food stock and ingredients useless. The cost to replace any damaged items can be recovered in a lawsuit. Inventory records should be compiled or, if records were destroyed, owners should recreate an estimate of the restaurant’s inventory at the time of the fire.
  • Non-Stock Inventory. A restaurant also has a claim for the cost to replace kitchen equipment, appliances, and fixtures such as tables, chairs, and stools. A restaurant owner shouldn’t overlook the costs of replacing these items.
  • Recovery Costs. Fire damage means cleanup costs, additional utilities, security expenses, costs associated with relocation efforts, as well as increased labor costs. Records of these expenses should be kept as recovery efforts progress.
  • Extraordinary Marketing Costs.  After a restaurant has been closed for an extended time, owners frequently incur additional costs associated with reopening. These include expenses for marketing, promotion, and advertising.
  • Lost Profits. A business such as a restaurant also has a claim for lost profits from the time business operations are shut down until the business has returned to full profitability. On behalf of our clients, we generally calculate the business’s earnings before interest taxes, depreciation, and amortization (EBITDA) to obtain a more accurate picture of a business’s profitability. Business owners should contact their tax preparer to obtain copies of any financial records damaged in the fire. Copies of tax transcripts can be requested from the IRS free of charge using Form 4606-T and Form 4606-T-EZ. Requests should be made as soon as possible.
  • Loss of Business Goodwill. Businesses have value beyond the mere sum of their assets. This value is referred to as Business Goodwill and accounts for the value of intangible assets. A Business Goodwill analysis would include factors such as reputation, customer loyalty, and business practices that add value to the business. To calculate Business Goodwill, we often consult an expert in the field of business valuation.

Contact us for more information on the value of your Dixie Fire claim.