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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
Day Trade Alerts
19 Sep 14 12:03:15
#GazerAlerts Alert updates: $DRL +5% $ESI +6% $NETE +7% $PDEX +10% $USU +5% $VHC +13% | via http://t.co/LQqutQYQ2N
GSWTrades
19 Sep 14 12:01:55
$DRL anyone know when the court ruling will happen?
Stock Horizon LLC
19 Sep 14 12:00:05
Alert updates: $DRL +5% $ESI +6% $NETE +7% $PDEX +10% $USU +5% $VHC +13% http://t.co/FgFxZXP2ok
Patrick
19 Sep 14 12:00:05
#SENTISHIFTUP $O $WMT $MRK $LULU $QUAD $RT $BA $WAG $DRL $AEO #quantheta
Bull Logic
19 Sep 14 12:00:02
$DRL Sale only lasts till 4
Kenneth D McClintock
19 Sep 14 11:59:38
RT @GuardiolaTwitt: Don Genovevo Meléndez Carrucini, tratadista de derecho contributivo es fuente de testimonio de Zaragoza. $DRL @Telenoti…
pete doom
19 Sep 14 11:53:13
$DRL "Ramon Rosario just demolish the testimony of CPA Zaragosa" - John Mudd
PhilCheeze
19 Sep 14 11:50:07
RT @petedoom: gov attacking their own witnesses. Looks good for $DRL http://t.co/nKPknSm1Ol
PhilCheeze
19 Sep 14 11:49:59
RT @Briefingcom: $DRL: Doral Fincl legal counsel provides comment on trial developments in the case of Doral v. Hacienda http://t.co/C3AatM…
PhilCheeze
19 Sep 14 11:49:53
RT @EBUYUKARSLAN: @Briefingcom As we thought and today action on this link showing us $drl is getting their Money.. Great
PhilCheeze
19 Sep 14 11:49:47
RT @Matttherose: Credibility of PR witness being destroyed. Judgement in favor of Doral imminent. Get ready for PPS surge. $DRL
RUCASO
19 Sep 14 11:49:45
RT @EBUYUKARSLAN: @Briefingcom As we thought and today action on this link showing us $drl is getting their Money.. Great
RUCASO
19 Sep 14 11:49:35
RT @Matttherose: Credibility of PR witness being destroyed. Judgement in favor of Doral imminent. Get ready for PPS surge. $DRL
PhilCheeze
19 Sep 14 11:49:32
RT @EBUYUKARSLAN: @GSWTrades Law is the Law.. everything is favor to the $DRL
Kenneth D McClintock
19 Sep 14 11:48:56
RT @GuardiolaTwitt: ¿Cuánto esfuerzo se pone en el detalle de la redacción de estos documentos?:Lcdo. Dapena "Como regla general se pone mu…
Kenneth D McClintock
19 Sep 14 11:48:45
RT @GuardiolaTwitt: Los $766M del acuerdo de 2012 es la base no amortizada del acuerdo de 2006 alegada por Doral. "Eso no es cierto", según…
Kenneth D McClintock
19 Sep 14 11:48:39
RT @GuardiolaTwitt: "Estamos hablando de millones largos" dice Zaragoza para afirmar que es un falseamiento material de parte de Doral. $DR…
Kenneth D McClintock
19 Sep 14 11:48:26
RT @GuardiolaTwitt: Doral puso $652M en Planilla de 2010 y $766M en 2012. "Además están mezclando cosa diferentes en la cifra de 2012" segú…
Kenneth D McClintock
19 Sep 14 11:48:10
RT @GuardiolaTwitt: Ahora declara el CPA Juan Zaragoza, perito de los demandados. $DRL
ENGIN BUYUKARSLAN
19 Sep 14 11:41:09
@GSWTrades Law is the Law.. everything is favor to the $DRL
GSWTrades
19 Sep 14 11:19:13
In $DRL the only thing that's scares me is... the Treasury writes the judge's checks. Yuk.
Bull Logic
19 Sep 14 11:11:37
RT @Matttherose: Credibility of PR witness being destroyed. Judgement in favor of Doral imminent. Get ready for PPS surge. $DRL
Matt Rose
19 Sep 14 11:09:59
Credibility of PR witness being destroyed. Judgement in favor of Doral imminent. Get ready for PPS surge. $DRL
ENGIN BUYUKARSLAN
19 Sep 14 11:05:04
@Briefingcom As we thought and today action on this link showing us $drl is getting their Money.. Great
ENGIN BUYUKARSLAN
19 Sep 14 11:02:57
RT @Briefingcom: $DRL: Doral Fincl legal counsel provides comment on trial developments in the case of Doral v. Hacienda http://t.co/C3AatM…
Briefing.com
19 Sep 14 11:00:46
$DRL: Doral Fincl legal counsel provides comment on trial developments in the case of Doral v. Hacienda http://t.co/C3AatMKO0s
pete doom
19 Sep 14 10:57:53
gov attacking their own witnesses. Looks good for $DRL http://t.co/nKPknSm1Ol
Christian Kat
19 Sep 14 10:43:52
$DRL Doral counsel comments on events in trial in the case against Hacienda Doral http://t.co/dudGRd97bU
John Giangreco
19 Sep 14 10:23:59
RT @sacredcowslayer: $DRL ...so shorties...is that all? ...you now think Doral is worth at least 7.06?
RUCASO
19 Sep 14 10:23:49
RT @PoorButRich: wow -> $DRL PR witness Zaragosa admits Doral was entitled to the tax credit.
John Giangreco
19 Sep 14 10:23:32
RT @PoorButRich: wow -> $DRL PR witness Zaragosa admits Doral was entitled to the tax credit.
Matt Rose
19 Sep 14 10:18:34
RT @PoorButRich: wow -> $DRL PR witness Zaragosa admits Doral was entitled to the tax credit.
PennyStock Zone
19 Sep 14 10:12:10
Best day trading DVD by Fous Alerts check it out! http://t.co/HJ6WDp65fM #stocks #trading #nasdaq #nyse $DRL $CRM $JRJC $GME $BAC $EBAY
Current Dollar
19 Sep 14 10:10:28
RT @PoorButRich: wow -> $DRL PR witness Zaragosa admits Doral was entitled to the tax credit.
Bull Logic
19 Sep 14 10:09:50
RT @PoorButRich: wow -> $DRL PR witness Zaragosa admits Doral was entitled to the tax credit.
Christian Kat
19 Sep 14 10:07:41
wow -> $DRL PR witness Zaragosa admits Doral was entitled to the tax credit.
Steven Banks
19 Sep 14 10:02:44
$DRL ...so shorties...is that all? ...you now think Doral is worth at least 7.06?
ENGIN BUYUKARSLAN
19 Sep 14 09:43:13
RT @attivacapital: Even taking into account #puertoricanproblems $drl is worth at least $14 a share
pete doom
19 Sep 14 09:32:32
$DRL court in recess until 2PM. If you are wondering why it's quiet right now.
PhilCheeze
19 Sep 14 09:29:13
RT @BullLogic: $DRL there is no evidence to support Hacienda's attempted nullification of its agreement with Doral
PhilCheeze
19 Sep 14 09:29:06
RT @attivacapital: Even taking into account #puertoricanproblems $drl is worth at least $14 a share
pete doom
19 Sep 14 09:04:22
RT @BullLogic: $DRL there is no evidence to support Hacienda's attempted nullification of its agreement with Doral
Day Trade Alerts
19 Sep 14 09:02:23
#GazerAlerts Alert updates: $DRL +5% $ESI +6% $NETE +6% $PDEX +10% $USU +5% $VHC +10% | via http://t.co/LQqutQYQ2N
Stock Horizon LLC
19 Sep 14 09:00:05
Alert updates: $DRL +5% $ESI +6% $NETE +6% $PDEX +10% $USU +5% $VHC +10% http://t.co/FgFxZXP2ok
Bull Logic
19 Sep 14 08:54:40
$DRL there is no evidence to support Hacienda's attempted nullification of its agreement with Doral
Steven Banks
19 Sep 14 08:53:00
@attivacapital What is total cash-on-hand for $DRL after sale to barclays?
Attiva Capital
19 Sep 14 08:47:42
Even taking into account #puertoricanproblems $drl is worth at least $14 a share
Telenoticias
19 Sep 14 08:18:33
RT @GuardiolaTwitt: Don Genovevo Meléndez Carrucini, tratadista de derecho contributivo es fuente de testimonio de Zaragoza. $DRL @Telenoti…
Luis Guardiola
19 Sep 14 08:15:02
Don Genovevo Meléndez Carrucini, tratadista de derecho contributivo es fuente de testimonio de Zaragoza. $DRL @TelenoticiasPR
PhilCheeze
19 Sep 14 08:14:20
RT @TradesForNow: $DRL huge play to watch on news due out soon
				
				
  +Follow June 9, 2014 2:27PM
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