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Doral Financial Scores Big Supreme Court Win

  +Follow June 9, 2014 2:27PM
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It’s been a dramatic couple of weeks for Puerto Rican lender Doral Financial (DRL) , who have experienced extreme whipsaw action as the company’s immediate future at any given point, be it insolvency or full financial recovery, changes by the day.

The fortunes took a turn for the better when the Puerto Rican Supreme Court made a crucial decision in Doral’s favor, opening the doors fort a major payout that could reverse the bank’s slide towards insolvency.  

Doral Seeks to Shore Up Capital

In early 2014 Doral had been discovered to be using improper assets to satisfy their Tier 1 capital requirements.  After this discovery, the bank scrambled to find a capital injection to stabilize the bank’s assets, as Moody’s, Fitch, and the S&P all downgraded the bank in response.

This put Doral in a very problematic situation. In the aftermath of the 2008 financial meltdown, banks were forced to have the capital required to pass more stringent stress tests to assure they could withstand financial catastrophe. In short, Doral needed money.

 It appeared Doral had found their savior in their own home government, who they claimed owed Doral a whopping $230 million in prior tax overpayments.

Imagine Doral’s surprise when the Puerto Rican government said, in no uncertain terms, “no.” Lacking any recourse, Doral filed a lawsuit in Puerto Rico’s home government, seeking to recover the money which they believed they were owed and so desperately needed.

Enter the Puerto Rican Supreme Court

Just four days later, the Supreme Court rendered their decision in Doral’s favor, and further forced the government to expedite a review of the repayment process, with a judgment set to be rendered by June 26.

While this far from guarantees that Doral will receive the desperately needed funds they seek to recover, the quick turnaround from the Supreme Court does give Doral a shot.

Although this development only means that Doral’s chances of receiving repayment from the government has changed from “no” to “maybe,” the company was ecstatic at the development. In a press release responding to the Supreme Court’s decision, Doral CEO Glen Wakeman said “We welcome the Puerto Rico Supreme Court's decisive action today. Doral is committed to pursuing its legal rights in this matter, and we invite the government of Puerto Rico to join us at the negotiating table so that we can resolve this issue and move forward."

What this Means for Doral and Their Stockholders

While it’s impossible to assign an exact dollar amount to hope, the market tried its best to do so on Monday trading action, with shares of Doral spiking on a prayer that the bank could receive a windfall.  

The Supreme Court’s decision clearly gives Doral some bargaining power, opening up the possibility that while they might not, and most likely will not, receive the full $230 million they seek, they can likely extract some capital from the government to shore up their reserves.

To be sure, Doral’s not out of hot water just yet. The San Juan-based lender still faces a class-action lawsuit from stockholders concerning alleged securities violations.

But if they are able to extract the money they believe they are owed from the Puerto Rican government, their fortunes, and in turn their stockholder’s fortunes, will undoubtedly change for the better.

By 1:30 EST shares of Doral had climbed 26.74 percent to hit $4.40 a share.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions.


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Results for DRL
Donald van Deventer
1 Oct 14 10:45:36
RT @KamakuraCo: Doral Bank, Puerto Rico, 1 Year Default Probability 23.83%, Up 2.89% Today $DRL http://t.co/ySXCgqAn4T via @salphatrending
Instaya
1 Oct 14 10:16:41
@georgesoros should do with $DRL what @WarrenBuffett did with $BAC #doralbank #bankofamerica http://t.co/3KliDvps98 #liveinstyle
Patrick
1 Oct 14 10:00:05
#SENTISHIFTUP $SCOK $LIQD $DRL $MBLY $INVN $TKMR $NLNK $AAL $BCRX $MS #quantheta
St. Louis Blues 2015
1 Oct 14 09:58:34
So...where are all the condescending $DRL bulls who scorned me for being #bearish on $DRL? You're all so quiet now...Come out and play.
Christian Kat
1 Oct 14 09:38:13
$DRL doing this one by hand... no stops...no wires... nothing...
Massman
1 Oct 14 09:37:28
RT @attivacapital: Bought few more $DRL Doral could do just like $COSI is doing & European banks did during the crisis:rights offering to e…
Luis S. Herrero
1 Oct 14 09:35:16
RT @KamakuraCo: Doral Bank, Puerto Rico, 1 Year Default Probability 23.83%, Up 2.89% Today $DRL http://t.co/ySXCgqAn4T via @salphatrending
Attiva Capital
1 Oct 14 09:29:24
Bought few more $DRL Doral could do just like $COSI is doing & European banks did during the crisis:rights offering to existing shareholders
Kamakura Corporation
1 Oct 14 09:23:37
Doral Bank, Puerto Rico, 1 Year Default Probability 23.83%, Up 2.89% Today $DRL http://t.co/ySXCgqAn4T via @salphatrending
Joshua Armstrong
1 Oct 14 09:12:25
To be clear, FDIC called $DRL subsidiary Doral Bank "significantly undercapitalized"
Joshua Armstrong
1 Oct 14 09:10:16
$DRL down more than 10% after FDIC calls it "significantly undercapitalized" http://t.co/WhSfGbFPeW
Christian Kat
1 Oct 14 09:06:32
$DRL I need to free more cash and a phone number of a nice flower shop close to Laureana Perez Perez office. Anyone want to participate? ;-)
Kell Slatter
1 Oct 14 09:02:52
RT @KourtlandW: $LIQD is ready to run today! $GPRO $TKMR $DRL $IWM $SRPT $ANGI $WPRT $NLNK $ADP $LAKE $BCRX $UAL $LUV $AAL $CAR $DAL http:/…
giuliafacci
1 Oct 14 09:01:10
RT @KourtlandW: $LIQD is ready to run today! $GPRO $TKMR $DRL $IWM $SRPT $ANGI $WPRT $NLNK $ADP $LAKE $BCRX $UAL $LUV $AAL $CAR $DAL http:/…
John Wayne
1 Oct 14 09:00:26
RT @KourtlandW: $LIQD is ready to run today! $GPRO $TKMR $DRL $IWM $SRPT $ANGI $WPRT $NLNK $ADP $LAKE $BCRX $UAL $LUV $AAL $CAR $DAL http:/…
cristina perez
1 Oct 14 08:58:21
RT @KourtlandW: $LIQD is ready to run today! $GPRO $TKMR $DRL $IWM $SRPT $ANGI $WPRT $NLNK $ADP $LAKE $BCRX $UAL $LUV $AAL $CAR $DAL http:/…
clovis xamã
1 Oct 14 08:53:58
RT @KourtlandW: $LIQD is ready to run today! $GPRO $TKMR $DRL $IWM $SRPT $ANGI $WPRT $NLNK $ADP $LAKE $BCRX $UAL $LUV $AAL $CAR $DAL http:/…
Rigoberto'#
1 Oct 14 08:53:04
RT @KourtlandW: $LIQD is ready to run today! $GPRO $TKMR $DRL $IWM $SRPT $ANGI $WPRT $NLNK $ADP $LAKE $BCRX $UAL $LUV $AAL $CAR $DAL http:/…
MARCELAO FODA
1 Oct 14 08:51:45
RT @KourtlandW: $LIQD is ready to run today! $GPRO $TKMR $DRL $IWM $SRPT $ANGI $WPRT $NLNK $ADP $LAKE $BCRX $UAL $LUV $AAL $CAR $DAL http:/…
Jacob
1 Oct 14 08:50:33
RT @KourtlandW: $LIQD is ready to run today! $GPRO $TKMR $DRL $IWM $SRPT $ANGI $WPRT $NLNK $ADP $LAKE $BCRX $UAL $LUV $AAL $CAR $DAL http:/…
Галина Лукинская
1 Oct 14 08:50:01
RT @KourtlandW: $LIQD is ready to run today! $GPRO $TKMR $DRL $IWM $SRPT $ANGI $WPRT $NLNK $ADP $LAKE $BCRX $UAL $LUV $AAL $CAR $DAL http:/…
khoan
1 Oct 14 08:49:34
RT @KourtlandW: $LIQD is ready to run today! $GPRO $TKMR $DRL $IWM $SRPT $ANGI $WPRT $NLNK $ADP $LAKE $BCRX $UAL $LUV $AAL $CAR $DAL http:/…
Abhishek Gupta
1 Oct 14 08:48:39
RT @KourtlandW: $LIQD is ready to run today! $GPRO $TKMR $DRL $IWM $SRPT $ANGI $WPRT $NLNK $ADP $LAKE $BCRX $UAL $LUV $AAL $CAR $DAL http:/…
pi ya
1 Oct 14 08:48:15
RT @KourtlandW: $LIQD is ready to run today! $GPRO $TKMR $DRL $IWM $SRPT $ANGI $WPRT $NLNK $ADP $LAKE $BCRX $UAL $LUV $AAL $CAR $DAL http:/…
Aladin
1 Oct 14 08:47:30
RT @KourtlandW: $LIQD is ready to run today! $GPRO $TKMR $DRL $IWM $SRPT $ANGI $WPRT $NLNK $ADP $LAKE $BCRX $UAL $LUV $AAL $CAR $DAL http:/…
Hamza awrach
1 Oct 14 08:46:31
RT @KourtlandW: $LIQD is ready to run today! $GPRO $TKMR $DRL $IWM $SRPT $ANGI $WPRT $NLNK $ADP $LAKE $BCRX $UAL $LUV $AAL $CAR $DAL http:/…
Bluestone Financial
1 Oct 14 08:46:14
$DRL takeover target by Bank looking @ #NYC #Florida charter #onlinebanking http://t.co/0uLbXK3bTS #NOLs #PuertoRico residential #mortgage
แสนดี วงศ์พร้อม
1 Oct 14 08:45:41
RT @KourtlandW: $LIQD is ready to run today! $GPRO $TKMR $DRL $IWM $SRPT $ANGI $WPRT $NLNK $ADP $LAKE $BCRX $UAL $LUV $AAL $CAR $DAL http:/…
Fb like
1 Oct 14 08:44:55
RT @KourtlandW: $LIQD is ready to run today! $GPRO $TKMR $DRL $IWM $SRPT $ANGI $WPRT $NLNK $ADP $LAKE $BCRX $UAL $LUV $AAL $CAR $DAL http:/…
petrarosalez5523
1 Oct 14 08:41:47
RT @KourtlandW: $LIQD is ready to run today! $GPRO $TKMR $DRL $IWM $SRPT $ANGI $WPRT $NLNK $ADP $LAKE $BCRX $UAL $LUV $AAL $CAR $DAL http:/…
NoodleRealms
1 Oct 14 08:41:09
RT @KourtlandW: $LIQD is ready to run today! $GPRO $TKMR $DRL $IWM $SRPT $ANGI $WPRT $NLNK $ADP $LAKE $BCRX $UAL $LUV $AAL $CAR $DAL http:/…
Jason Broody
1 Oct 14 08:40:36
RT @KourtlandW: $LIQD is ready to run today! $GPRO $TKMR $DRL $IWM $SRPT $ANGI $WPRT $NLNK $ADP $LAKE $BCRX $UAL $LUV $AAL $CAR $DAL http:/…
francescahamler4554
1 Oct 14 08:38:29
RT @KourtlandW: $LIQD is ready to run today! $GPRO $TKMR $DRL $IWM $SRPT $ANGI $WPRT $NLNK $ADP $LAKE $BCRX $UAL $LUV $AAL $CAR $DAL http:/…
Борис Евлахин
1 Oct 14 08:37:41
RT @KourtlandW: $LIQD is ready to run today! $GPRO $TKMR $DRL $IWM $SRPT $ANGI $WPRT $NLNK $ADP $LAKE $BCRX $UAL $LUV $AAL $CAR $DAL http:/…
พลภัทร พหลสว่าง
1 Oct 14 08:37:15
RT @KourtlandW: $LIQD is ready to run today! $GPRO $TKMR $DRL $IWM $SRPT $ANGI $WPRT $NLNK $ADP $LAKE $BCRX $UAL $LUV $AAL $CAR $DAL http:/…
marinalva torres
1 Oct 14 08:36:49
RT @KourtlandW: $LIQD is ready to run today! $GPRO $TKMR $DRL $IWM $SRPT $ANGI $WPRT $NLNK $ADP $LAKE $BCRX $UAL $LUV $AAL $CAR $DAL http:/…
Christian Kat
1 Oct 14 08:36:00
$DRL " @AVB55 Scotch for lunch? " No ice please!!!!.. and make it a double one!
Creative Online
1 Oct 14 08:33:22
RT @KourtlandW: $LIQD is ready to run today! $GPRO $TKMR $DRL $IWM $SRPT $ANGI $WPRT $NLNK $ADP $LAKE $BCRX $UAL $LUV $AAL $CAR $DAL http:/…
Christian Kat
1 Oct 14 08:33:00
@arivera ??? The daily chart shows a nice uptrend. $DRL was at 1.87 in May. But I guess the weekly chart shows their bankruptcy by 7/15 ;-)
Lucía López
1 Oct 14 08:32:39
RT @KourtlandW: $LIQD is ready to run today! $GPRO $TKMR $DRL $IWM $SRPT $ANGI $WPRT $NLNK $ADP $LAKE $BCRX $UAL $LUV $AAL $CAR $DAL http:/…
whiteboardpro9
1 Oct 14 08:31:19
RT @KourtlandW: $LIQD is ready to run today! $GPRO $TKMR $DRL $IWM $SRPT $ANGI $WPRT $NLNK $ADP $LAKE $BCRX $UAL $LUV $AAL $CAR $DAL http:/…
Utily
1 Oct 14 08:30:03
RT @KourtlandW: $LIQD is ready to run today! $GPRO $TKMR $DRL $IWM $SRPT $ANGI $WPRT $NLNK $ADP $LAKE $BCRX $UAL $LUV $AAL $CAR $DAL http:/…
zee
1 Oct 14 08:29:03
RT @KourtlandW: $LIQD is ready to run today! $GPRO $TKMR $DRL $IWM $SRPT $ANGI $WPRT $NLNK $ADP $LAKE $BCRX $UAL $LUV $AAL $CAR $DAL http:/…
Neph
1 Oct 14 08:22:23
$DRL I bet looks better in an hour
The Eye of the I
1 Oct 14 08:22:14
RT @KourtlandW: $LIQD is ready to run today! $GPRO $TKMR $DRL $IWM $SRPT $ANGI $WPRT $NLNK $ADP $LAKE $BCRX $UAL $LUV $AAL $CAR $DAL http:/…
Buzz
1 Oct 14 08:21:39
RT @KourtlandW: $LIQD is ready to run today! $GPRO $TKMR $DRL $IWM $SRPT $ANGI $WPRT $NLNK $ADP $LAKE $BCRX $UAL $LUV $AAL $CAR $DAL http:/…
zhang yunfei
1 Oct 14 08:21:06
RT @KourtlandW: $LIQD is ready to run today! $GPRO $TKMR $DRL $IWM $SRPT $ANGI $WPRT $NLNK $ADP $LAKE $BCRX $UAL $LUV $AAL $CAR $DAL http:/…
reeeda
1 Oct 14 08:20:26
RT @KourtlandW: $LIQD is ready to run today! $GPRO $TKMR $DRL $IWM $SRPT $ANGI $WPRT $NLNK $ADP $LAKE $BCRX $UAL $LUV $AAL $CAR $DAL http:/…
quentin
1 Oct 14 08:19:46
RT @KourtlandW: $LIQD is ready to run today! $GPRO $TKMR $DRL $IWM $SRPT $ANGI $WPRT $NLNK $ADP $LAKE $BCRX $UAL $LUV $AAL $CAR $DAL http:/…
Instaya
1 Oct 14 08:19:30
Doral sells more assets raising money #internally after getting 2nd letter from FDIC as part of capital plan http://t.co/vBVGaC7Pja $DRL
				
				
  +Follow June 9, 2014 2:27PM
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