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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
Charts 123
2 Sep 14 03:52:02
Sell Signal: $CORT $DHT $DRL $IMPV $NSR $PKT $POWR $RLYP $WHX $ZHNE http://t.co/MRpQgC89xc #stocks
PennyStock Zone
1 Sep 14 21:16:43
Best day trading DVD by Fous Alerts check it out! http://t.co/HJ6WDp65fM #stocks #trading #nasdaq #nyse $DRL $CRM $JRJC $GME $BAC $EBAY
Stock News Guru
1 Sep 14 15:15:17
$DRL: DORAL FINANCIAL CORP Files SEC form 8-K, Other Events http://t.co/jb6BwW3Tkg http://t.co/ealvXsFhvS
PennyStock Zone
1 Sep 14 14:35:51
Best day trading DVD by Fous Alerts check it out! http://t.co/HJ6WDp65fM #stocks #trading #nasdaq #nyse $DRL $CRM $JRJC $GME $BAC $EBAY
Adam Cole
1 Sep 14 08:05:09
Hope everybody is having a nice Labor Day! Gotta go enjoy life, especially on days the market is closed 😃 $GERN $GALE $RTRX $ZGNX $DRL $GRPN
PennyStock Zone
1 Sep 14 04:21:28
Multimillionaire trader SUPERTRADES and his EASY to replicate strategy can make you money! http://t.co/Q6vtkuSPbk $DRL $GST $NUAN $UVXY
Charts 123
1 Sep 14 03:52:02
Sell Signal: $CORT $DHT $DRL $IMPV $NSR $PKT $POWR $RLYP $WHX $ZHNE http://t.co/84CSXMcDB6 #stocks
PhilCheeze
1 Sep 14 03:49:18
RT @iHangout: http://t.co/Vv1sYDyeQn Stock_Tracker: Stock DD Board: Doral Financial Corp (DRL) 6.71 $DRL NYSE stocks http://t.co/JhrB6hedeX
PhilCheeze
1 Sep 14 03:48:16
RT @WhiteCoatMafia: $DRL case will not go to evidentiary hearing because PR has absolutely no evidence. No evidence -> no evidentiary heari…
iHangout
1 Sep 14 03:01:45
http://t.co/Vv1sYDyeQn Stock_Tracker: Stock DD Board: Doral Financial Corp (DRL) 6.71 $DRL NYSE stocks http://t.co/JhrB6hedeX
Business News Now
31 Aug 14 16:15:20
$DRL: DORAL FINANCIAL CORP Files SEC form 8-K, Other Events http://t.co/6QIdg7z7nZ http://t.co/Rz6TzSejUB
Adam Cole
31 Aug 14 15:44:15
@puertoricoguru That is the class of the action, regardless of how it happened. It states $DRL ID'd as accident and replaced their mgmt.
PR Guru
31 Aug 14 15:39:03
@WhiteCoatMafia Well, clearly it was not an accident, that is a financial fraud action. $DRL
Adam Cole
31 Aug 14 15:30:25
@WhiteCoatMafia Whereas $DRL has the SEC and prior PR treasuries admitting income was overestimated (and thus income taxes overpaid).
Adam Cole
31 Aug 14 14:53:51
$DRL case will not go to evidentiary hearing because PR has absolutely no evidence. No evidence -> no evidentiary hearing. Default DRL win.
Adam Cole
31 Aug 14 14:15:29
Document showing $DRL did overpay income taxes, via an accounting error leading to overestimating income. PR owes $$. http://t.co/hYfiiNlLm5
Adam Cole
31 Aug 14 14:00:36
@puertoricoguru It was this accounting accident, the overstated income, that lead to PR owing $DRL millions in tax refunds. Good find!
Financial Updates
31 Aug 14 13:15:17
$DRL: Stocks in Trouble: Adept Technology Inc (ADEP), Doral Financial Corp. (DRL ... http://t.co/vWDTrteGHB http://t.co/M1mDbSva9o
PR Guru
31 Aug 14 12:59:54
SEC's 2006 complaint against $DRL for overstating interest only loans and income. http://t.co/qR6Yyr4dKm
PhilCheeze
31 Aug 14 10:54:36
Doral Financial Corp. $DRL | Stock Message Board - Investors Hangout http://t.co/9eOLvWIUkM
PennyStock Zone
31 Aug 14 09:03:15
Multimillionaire trader SUPERTRADES and his EASY to replicate strategy can make you money! http://t.co/Q6vtkuSPbk $DRL $GST $NUAN $UVXY
PhilCheeze
31 Aug 14 07:23:01
RT @WhiteCoatMafia: @BayAreaCoins From asking around, I also haven't heard of any brokers loaning. With $DRL holding and catalysts closer, …
Companies in News
31 Aug 14 07:15:21
$DRL: Doral Declines as SEC Probes Puerto Rico Tax Receivables http://t.co/uEhA87A30y http://t.co/f7gzzFT2WM
Business News Watch
31 Aug 14 06:15:17
$DRL: DORAL FINANCIAL CORP Files SEC form 8-K, Other Events http://t.co/ONO9Jhr459 http://t.co/OgOJPsboOv
PennyStock Zone
31 Aug 14 06:12:32
Best day trading DVD by Fous Alerts check it out! http://t.co/AeQ95GG2rM #stocks #trading #nasdaq #nyse $DRL $CRM $JRJC $GME $BAC $EBAY
Adam Cole
31 Aug 14 06:03:06
@BayAreaCoins From asking around, I also haven't heard of any brokers loaning. With $DRL holding and catalysts closer, agreed - could spike
RUCASO
31 Aug 14 04:33:29
RT @PhilCheeze: $DRL Keep a very close eye on it as we approach the court date. I expect to see a spike upon any settlement deal made ~
Adam Cole
30 Aug 14 17:02:14
RT @PhilCheeze: $DRL Keep a very close eye on it as we approach the court date. I expect to see a spike upon any settlement deal made ~
PhilCheeze
30 Aug 14 15:56:52
RT @BayAreaCoins: What am I holding today... $BTC, $HUC (those are my cryptos) $WIN my bread and butter. $DRL for my long shot with a chan…
PhilCheeze
30 Aug 14 15:56:41
RT @CanopyCrest: Excellent article on why Doral could NOT accept Puerto Rico's settlement offer: It's a scam. $DRL http://t.co/eb5TiBV7Cn
PhilCheeze
30 Aug 14 15:56:25
RT @ABradWilliams: $DRL: Doral Financial wins round in Puerto Rico legal case, shares jump http://t.co/1SzEGWuOvu http://t.co/ROoMmDgMfb
PhilCheeze
30 Aug 14 15:56:00
RT @WhiteCoatMafia: @SneakyPHolsters If $DRL settles before court, and I think there's a good chance, then my bet is DRL hits before $GERN.
PhilCheeze
30 Aug 14 15:32:52
$DRL Keep a very close eye on it as we approach the court date. I expect to see a spike upon any settlement deal made ~
PennyStock Zone
30 Aug 14 13:58:48
Best day trading DVD by Fous Alerts check it out! http://t.co/HJ6WDp65fM #stocks #trading #nasdaq #nyse $DRL $CRM $JRJC $GME $BAC $EBAY
PennyStock Zone
30 Aug 14 10:51:42
Multimillionaire trader SUPERTRADES and his EASY to replicate strategy can make you money! http://t.co/Ho9ydXHTWl $DRL $GST $NUAN $UVXY
Financial Headlines
30 Aug 14 10:15:17
$DRL: Doral Financial (DRL), Puerto Rico Treasury Department Extended Negotiations ... http://t.co/pMxl45H8xD http://t.co/1UZt5eAnhG
PhilCheeze
30 Aug 14 10:11:28
Doral Financial Corp. $DRL | Stock Message Board - Investors Hangout http://t.co/6Zj9CzK4qr
Derald Muniz
30 Aug 14 08:56:09
50/50 Basket to end the week: $DRL $GLUU $JRJC $LEJU $PBYI $TKMR $VJET
Edward Robinson
30 Aug 14 08:54:10
RT @1nvestor: Newly added (personal) this week that survived to the weekend: $QIHU $ACHN $PBR $WDAY $SAFM $ARUN $TIF $SIG $AVGO $LEJU $DRL
Derald Muniz
30 Aug 14 08:53:13
Newly added (personal) this week that survived to the weekend: $QIHU $ACHN $PBR $WDAY $SAFM $ARUN $TIF $SIG $AVGO $LEJU $DRL
PennyStock Zone
30 Aug 14 08:12:10
Best day trading DVD by Fous Alerts check it out! http://t.co/AeQ95GG2rM #stocks #trading #nasdaq #nyse $DRL $CRM $JRJC $GME $BAC $EBAY
PennyStock Zone
29 Aug 14 21:41:47
Best day trading DVD by Fous Alerts check it out! http://t.co/HJ6WDp65fM #stocks #trading #nasdaq #nyse $DRL $CRM $JRJC $GME $BAC $EBAY
Bulls vs Bears
29 Aug 14 20:15:20
$DRL: Slumping Stocks: Adept Technology Inc(NASDAQ:ADEP), Doral Financial Corp ... http://t.co/muEiJgTJEk http://t.co/VhPQGMQHF7
Bloody Mary
29 Aug 14 19:42:52
RT @puertoricoguru: PR economic index drops again - Caribbean Business http://t.co/qS6TzXquJg $BPOP $DRL $OFG $FBP #PReconomy #muniland
Wilo Ramos-Ferrer
29 Aug 14 19:37:02
RT @puertoricoguru: PR economic index drops again - Caribbean Business http://t.co/qS6TzXquJg $BPOP $DRL $OFG $FBP #PReconomy #muniland
Adam Cole
29 Aug 14 19:29:20
@SneakyPHolsters My dream trade would be to hit $DRL, then roll into more $GERN. If $BABA shows up in the interim, that's also on hit list.
PennyStock Zone
29 Aug 14 19:25:13
Best day trading DVD by Fous Alerts check it out! http://t.co/HJ6WDp65fM #stocks #trading #nasdaq #nyse $DRL $CRM $JRJC $GME $BAC $EBAY
Adam Cole
29 Aug 14 19:21:38
@SneakyPHolsters If $DRL settles before court, and I think there's a good chance, then my bet is DRL hits before $GERN.
Adam Cole
29 Aug 14 19:20:45
@SneakyPHolsters It's unfortunate $GERN and $DRL have similarly timed catalysts. If $DRL goes to court, who knows which happens first. But..
Market News
29 Aug 14 16:15:17
$DRL: Why Doral Financial (DRL) Stock Is Soaring Today http://t.co/ptKHsJ24LR http://t.co/WHrco7kffC
				
				
  +Follow June 9, 2014 2:27PM
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