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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
$Stocknewsalerts
21 Oct 14 14:00:18
$DRL Doral Financial Corporation Daily Stock Price Summary From our Stock News Alerts App
PhilCheeze
21 Oct 14 12:08:44
RT @attivacapital: S&P : "If Puerto Rico loses the case ...a $45 million per year payout over five years -- would remain relatively small .…
PhilCheeze
21 Oct 14 12:08:40
RT @attivacapital: S&P: Puerto Rico Rating Unchanged On Doral $DRL Court Ruling
Attiva Capital
21 Oct 14 11:23:17
S&P: Puerto Rico Rating Unchanged On Doral $DRL Court Ruling
Attiva Capital
21 Oct 14 11:22:21
S&P : "If Puerto Rico loses the case ...a $45 million per year payout over five years -- would remain relatively small .." $DRL
Hereitfirst
20 Oct 14 22:13:59
how to trade $SCTY $VSR $SPY $TSLA $DRL $NFLX $GOOGL $AMZN $CYBR $BIDU $AAPL $SPY $LAKE http://t.co/uTZpFW8a4K
Hereitfirst
20 Oct 14 22:12:41
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Charlie Pryor
20 Oct 14 21:47:13
Looking for $RBCN $DRL and $VSR to all make some positive movements on news this week, perhaps. All unrelated stocks with great potential.
$Stocknewsalerts
20 Oct 14 14:01:01
$DRL Doral Financial Corporation Daily Stock Price Summary From our Stock News Alerts App
Patrick
20 Oct 14 14:00:03
#SENTISHIFTDOWN $GM $TM $IBM $DRL $CVS $DJIA $ZION $T $GDX $CBST #quantheta
PhilCheeze
20 Oct 14 13:03:14
RT @Instaya: UPDATE 1-Puerto Rico mulls $2.5 bln debt sale to boost liquidity-sources #Finance http://t.co/QGGAwMOZXw … $DRL $FBP $BNS $SAN
Patrick
20 Oct 14 12:00:03
#SENTISHIFTDOWN $GM $DRL $IBM $CVS $DJIA $T $GDX $SLV $XLE $TSLA #quantheta
barna
20 Oct 14 11:56:56
$DRL 10k 6.83 $XXII 10k 3.00 $SSH 5K 6.15 $TENX 10k 3.50 $CNAT 5k 6.68 $EXTR 10k 3.08 and $BIS hedge
Instaya
20 Oct 14 11:49:44
UPDATE 1-Puerto Rico mulls $2.5 bln debt sale to boost liquidity-sources #Finance http://t.co/QGGAwMOZXw … $DRL $FBP $BNS $SAN
Instaya
20 Oct 14 11:47:21
The U.S. Environmental Protection Agency has awarded $26.8 million to Puerto Rico to help finance http://t.co/SAmBJYdU9m $DRL $FBP $BNS
Instaya
20 Oct 14 11:45:39
Eli Lilly will sell Puerto Rico factory http://t.co/umFHrhBUaN @agarciapadilla @BacoFomento #Doralbank $DRL
Instaya
20 Oct 14 11:44:44
Puerto Rico government bank has $1.9 bln in liquid assets -GDB http://t.co/VQ7gewqmxN #news #finance $DRL $SBSA $FBP
Instaya
20 Oct 14 11:06:13
Canadian banks map next stage of U.S. invasion http://t.co/ogaT6fIW3m $RBC $TD $BMO $DRL
lord of trading
20 Oct 14 11:02:49
$DRL Up Over 2%: I Can Make You Money Like This http://t.co/VxTwTqihSB
Instaya
20 Oct 14 10:14:33
UBS Recommends That Brokers Continue To Offer Risky Puerto Rico Funds http://t.co/2esdLok5Wz $DRL
PhilCheeze
20 Oct 14 10:04:25
RT @SeekingAlpha: The Doral Double http://t.co/CvVj3rCM0i $DRL
Patrick
20 Oct 14 10:00:04
#SENTISHIFTDOWN $GM $DJIA $T $DRL $IBM $GDX $UGAZ $XLE $SLV $TSLA #quantheta
BuyHi_SellLow
20 Oct 14 08:30:08
RT @PsychoOnWallSt: $DRL nice move on low volume
PsychoOnWallSt
20 Oct 14 08:21:21
$DRL nice move on low volume
Patrick
20 Oct 14 08:00:03
#SENTISHIFTDOWN $DJIA $IBM $DRL $GDX $TSLA $XLE $S $VZ $SAP $UGAZ #quantheta
Jersey Drew
20 Oct 14 07:28:35
@PsychoOnWallSt so is $DRL again I think
PhilCheeze
20 Oct 14 07:28:03
$DRL now up 4.79% to $6.35 on nice volume increasing ~ http://t.co/TN7kz9RNIR
iHangout
20 Oct 14 07:06:57
http://t.co/Vv1sYDyeQn PhilCheeze: NASDAQ DIP and RIP: $DRL bouncing green today at $6.23 up 2.81 % http://t.co/ET21Y8Vxa3
PhilCheeze
20 Oct 14 07:04:26
$DRL bouncing green today at $6.23 up 2.81 % ~ http://t.co/86TEMk1qLW
Instaya
20 Oct 14 06:48:08
About #PuertoRico is out! http://t.co/jskqvqzYjE … Stories via @titoauger @ltorresvale @Instaya $drl $bpop $sbsa $fbp $san $bns $jcp
PhilCheeze
20 Oct 14 06:45:19
$DRL up 2.97% this morning at $6.24 ~ http://t.co/NxVJIg8ySt
PhilCheeze
20 Oct 14 05:25:35
RT @jjaasszz: $DRL with $1 billion in liquid after assets sale + court ruling, Monday could trigger squeeze. MC only $36 mil?? http://t.co/…
PhilCheeze
20 Oct 14 05:25:29
RT @Instaya: $DRL #PuertoRico PR Legislature shamelessly continues unlawful pressure despite court ruling. http://t.co/HLoItvgWgH @agarcia…
Instaya
19 Oct 14 22:28:23
$DRL #PuertoRico PR Legislature shamelessly continues unlawful pressure despite court ruling. http://t.co/HLoItvgWgH @agarciapadilla
Instaya
19 Oct 14 22:27:25
RT @sacredcowslayer: $DRL #PuertoRico PR Legislature shamelessly continues unlawful pressure on Doral despite court ruling. http://t.co/IQR…
Instaya
19 Oct 14 22:26:47
RT @jjaasszz: $DRL with $1 billion in liquid after assets sale + court ruling, Monday could trigger squeeze. MC only $36 mil?? http://t.co/…
PR Guru
19 Oct 14 19:56:40
Have Banks Learned Anything From the Financial Crisis? (DRL, OZRK): http://t.co/gdbRNDGa8I via @themotleyfool $drl
Steven Banks
19 Oct 14 18:18:29
$DRL #PuertoRico PR Legislature shamelessly continues unlawful pressure on Doral despite court ruling. http://t.co/IQRU5wb91Q
MercadoMagico.com
19 Oct 14 11:56:03
@Univision guts #PuertoRico #news operation http://t.co/d9BBDIkcd4 @agarciapadilla $SBSA $DRL @BacoFomento
Jersey Drew
18 Oct 14 19:31:25
RT @jjaasszz: $DRL with $1 billion in liquid after assets sale + court ruling, Monday could trigger squeeze. MC only $36 mil?? http://t.co/…
Calm trader
18 Oct 14 19:08:29
$DRL with $1 billion in liquid after assets sale + court ruling, Monday could trigger squeeze. MC only $36 mil?? http://t.co/FKTHDo9RD5
InvestorDaily
18 Oct 14 05:05:29
Investing News Weekly Review (10/13 – 10/17) $JCP $CSX $DRL $NLNK $JPM $GDP $CBS $QCOM $ABBV $NFLX $AXP $SWN… http://t.co/c8xoIpXTwZ
Calm trader
17 Oct 14 20:22:00
$DRL Bulls need some news on DORAL before Monday .. Any one from PR has info?? Bulls need that run
PsychoOnWallSt
17 Oct 14 19:17:51
@cate_long @JohnConaway they're gonna have to just to pay off $DRL
Brummie Santa
17 Oct 14 14:19:34
RT @Instaya: On #Christmas #holidays avoid #PuertoRico @agarciapadilla doesn't respect #ruleoflaw would you #besafe as #tourist? $drl $san …
PhilCheeze
17 Oct 14 14:09:30
RT @tickerchirp: Hot Tweets Pertaining to $DRL on 10/17/2014 http://t.co/Prf12Z8hfl
PhilCheeze
17 Oct 14 14:09:08
RT @Instaya: On #Christmas #holidays avoid #PuertoRico @agarciapadilla doesn't respect #ruleoflaw would you #besafe as #tourist? $drl $san …
PhilCheeze
17 Oct 14 14:08:56
RT @jjaasszz: Watch low floater $drl can squeeze as consolidating,, $lake $dgly
PhilCheeze
17 Oct 14 14:08:49
RT @laurenholmesNYC: $DRL where did all the bears go? To know more about Stock stay connect here http://t.co/IhJaUAjPfb
PhilCheeze
17 Oct 14 14:08:37
RT @attivacapital: @JessicaLabrador @agarciapadilla decision not to honor $DRL agreement also affecting #PuertoRico,current investors, bon…
				
				
  +Follow June 9, 2014 2:27PM
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