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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
WhiteCoatMafia
28 Nov 14 14:59:20
On watch for SWING entry: $GLUU $GALE $ZGNX $MOBI $DRL SHORT: $VGGL LONG: $GERN
$Stocknewsalerts
28 Nov 14 14:02:57
$DRL Doral Financial Corporation Daily Stock Price Summary From our Stock News Alerts App
Sylvester Lowe
27 Nov 14 21:34:06
RT @tickerchirp: Most Popular Tweets for $DRL (Doral Financial Corp symbol DRL) on 10/28/2014
$Stocknewsalerts
26 Nov 14 13:57:50
$DRL Doral Financial Corporation Daily Stock Price Summary From our Stock News Alerts App
Vaulty Boy
26 Nov 14 10:03:50
$drl very low vol. no action so far. 5.20ish still holding. Need to move on if not moving.
Papo Finura
26 Nov 14 09:40:08
RT @BullLogic: $DRL PR doesn't have a snow balls chance in PR.
Bull Logic
26 Nov 14 09:36:58
$DRL PR doesn't have a snow balls chance in PR.
Large Void Bot
26 Nov 14 06:00:22
Popular: $TASR, $CTRP, $FNF, $HTZ, $CAKE, $PAAS, $SNDK, $SJM, $R, $HSY, $DRL, $ALOT, $MSFT, $KMP, $ERY
$Stocknewsalerts
25 Nov 14 13:59:57
$DRL Doral Financial Corporation Daily Stock Price Summary From our Stock News Alerts App
Mexican Trades
25 Nov 14 09:59:51
$DRL??
Bull Logic
25 Nov 14 08:47:41
$DRL continues upward
Bull Logic
25 Nov 14 07:47:32
$DRL Highs on low volume
Bull Logic
25 Nov 14 07:16:04
$DRL green
Bull Logic
25 Nov 14 05:26:32
$DRL Commonwealth has till Jan 3 to appeal. Turned down allready. #payupandshutup
Vaulty Boy
25 Nov 14 04:53:21
If long on $drl be careful. Yest had a bearish engulfing pattern.
TickerChirp
24 Nov 14 19:27:03
Hot in Twitter About $DRL (Doral Financial Corp symbol DRL) on 11/25/2014 http://t.co/s4e4PDmugg
$Stocknewsalerts
24 Nov 14 14:03:27
$DRL Doral Financial Corporation Daily Stock Price Summary From our Stock News Alerts App
Bull Logic
24 Nov 14 11:50:38
$DRL easy manipulation took out stops. Enjoy boys. Long.
Vaulty Boy
24 Nov 14 11:37:18
$MILL nice push if closes above 3.25ish will long it before close. $DRL pulling back as expected (if no b/o) I am swinging it stop at 5.20
Bull Logic
24 Nov 14 09:39:03
$DRL pr must be shorting...
Bull Logic
24 Nov 14 09:32:34
$DRL flipper beat down. Needs more cowbell
Vaulty Boy
24 Nov 14 09:32:07
$DRL if I am wrong will take it off around 5.20ish for a small loss
Vaulty Boy
24 Nov 14 09:31:17
$DRL got filled at 5.54, risk 5.20ish. true b/o is at 5.60. until then it is just anticipating. IMO that is where s/s will cover and squeeze
Vaulty Boy
24 Nov 14 09:22:26
$THRX nice run .33c so far since my 14.50ish alert. very nice! will watch for a pullback on it! waiting on $DRL to b/o 5.55.
Vaulty Boy
24 Nov 14 08:59:47
$DRL buy 5.53 risk 5.20 nice stock, like the price action so far! DRL is a former runner! http://t.co/MwNGRhkLra
Bull Logic
24 Nov 14 08:29:32
$DRL could be news coming big volume pop
Bull Logic
24 Nov 14 08:27:45
$DRL highs get ready!!
Bull Logic
24 Nov 14 08:21:08
$DRL sell now buy back higher imo pr will pay up
CC Investments
24 Nov 14 07:43:52
Our analysts anticipate a $DRL run in the coming weeks. FDIC compliance on the horizon. Stay tuned.
Bull Logic
24 Nov 14 07:38:26
$DRL highs
Bull Logic
24 Nov 14 07:25:05
$DRL low float could rip with some volume
PhilCheeze
23 Nov 14 17:39:51
@KnightsOfWallST final judgement by the courts came in weeks ago, $DRL WON ! PR Govt Stall tactics on payment will not go on for very long
Knights of Wall ST
23 Nov 14 17:38:15
@PhilCheeze when is the final judgement? $drl
PhilCheeze
23 Nov 14 09:35:49
@WeeklyReversal @FioritoJarrad agreed. $DRL is ready to run hard. #PRGOVTLOSTINCOURT #DoralWins
PhilCheeze
23 Nov 14 09:34:14
RT @WeeklyReversal: @FioritoJarrad hat tip of the week goes to $DRL long after nice consolidation and now accumulation to reverse..lol on w…
Analyze
22 Nov 14 22:24:55
@FioritoJarrad hat tip of the week goes to $DRL long after nice consolidation and now accumulation to reverse..lol on watch
PhilCheeze
22 Nov 14 17:45:39
RT @BullLogic: $DRL GIMME A SQUEEZE.
PhilCheeze
22 Nov 14 17:45:22
RT @BullLogic: $DRL Chart looks good. Holding for payday. #yourgonnachase
$Stocknewsalerts
21 Nov 14 16:31:54
$DRL Doral Financial Corporation Daily Stock Price Summary From our Stock News Alerts App
PhilCheeze
21 Nov 14 15:39:29
$DRL Very Nice Day Today ~ http://t.co/ylKFOCVii6
Bull Logic
21 Nov 14 14:27:42
$DRL Chart looks good. Holding for payday. #yourgonnachase
$Stocknewsalerts
21 Nov 14 14:00:23
$DRL Doral Financial Corporation Daily Stock Price Summary From our Stock News Alerts App
PhilCheeze
21 Nov 14 11:31:58
@BullLogic still stalling. $DRL will get the money soon. PR lost fair and square. Uncle Sam won't allow any more funny business from PR ~
Bull Logic
21 Nov 14 10:53:15
$DRL PR gonna pay up this weekend???
Bull Logic
21 Nov 14 10:52:39
RT @PhilCheeze: @puertoricoguru nah. $DRL run to $12-$15 PPS on the way. #USGOVTWILLMAKEPRGOVTPAYDORAL
Bull Logic
21 Nov 14 10:13:18
$DRL GIMME A SQUEEZE.
Media Sentiment
21 Nov 14 10:00:00
$DRL received a new alert. Find out why at http://t.co/5lwmDm2SCs #stocks #daytrading #trading #mkt #NYSE #NASDAQ #markets 264
PhilCheeze
21 Nov 14 09:57:36
$DRL up 2% to $5.50 and looking good for a breakout with squeezing bollinger bands on the daily ~
PhilCheeze
21 Nov 14 09:54:34
RT @bman_alerts: $DRL chart
Stock Sensation
21 Nov 14 08:46:27
RT @GiancarloChimie: Stocks to watch: $VSR $NETE $MVIS $MNGA $DRL $ISNS $DGLY $EVRY $NYMX $GEVO $IMRS $OCLR $AMCF $VGGL $IBIO
				
				
  +Follow June 9, 2014 2:27PM
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