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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
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..
Neva Winter
29 Aug 14 18:20:36
New Study Examines the Costs $DRL http://t.co/9lPaUYMwLL
Oralia Butler
29 Aug 14 18:19:26
New Study Examin $DRL http://t.co/N4X7WKUn3W
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
PR Guru
29 Aug 14 15:42:44
PR economic index drops again - Caribbean Business http://t.co/qS6TzXquJg $BPOP $DRL $OFG $FBP #PReconomy #muniland
PR Guru
29 Aug 14 15:40:59
PR Economic Activity Index July 2014 http://t.co/TBsoBpiEq1 … $BPOP $DRL $OFG $FBP #PReconomy
Michael
29 Aug 14 15:22:05
@WhiteCoatMafia I'm curious, do you feel that a catalyst for $DRL is closer than $GERN?
PennyStock Zone
29 Aug 14 14:41:43
Multimillionaire trader SUPERTRADES and his EASY to replicate strategy can make you money! http://t.co/Ho9ydXHTWl $DRL $GST $NUAN $UVXY
$Stocknewsalerts
29 Aug 14 14:03:35
$DRL Doral Financial Corporation Daily Stock Price Summary From our Stock News Alerts App
John Giangreco
29 Aug 14 13:33:23
RT @WhiteCoatMafia: Now with 35,000 $DRL shares at avg $6.85
Business Updates
29 Aug 14 13:15:19
$DRL: DORAL FINANCIAL CORP Files SEC form 8-K, Other Events http://t.co/5D4s5EJCLJ http://t.co/Sul0LWNw0e
Adam Cole
29 Aug 14 12:56:52
Now with 35,000 $DRL shares at avg $6.85
Instaya
29 Aug 14 12:22:54
$DRL The American Rose: Nice Try #PuertoRico. #Banks Weren't Born Yesterday http://t.co/gBhKbPNXxd @agarciapadilla @Sincomillas #doralbank
PennyStock Zone
29 Aug 14 11:46:08
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
29 Aug 14 10:41:05
Multimillionaire trader SUPERTRADES and his EASY to replicate strategy can make you money! http://t.co/Ho9ydXHTWl $DRL $GST $NUAN $UVXY
Adam Cole
29 Aug 14 10:27:03
@puertoricoguru True. But investors do know $DRL is currently priced like a dead fish. Discount sell -> restructured survival -> 🐂 profit 🐂
ENGIN BUYUKARSLAN
29 Aug 14 09:52:37
@Massman0134 What do you mean buddy? by the way I am out of $drl till court time. I go better stock now before come back to drl
Stocks in News
29 Aug 14 09:15:19
$DRL: Doral Financial wins round in Puerto Rico legal case, shares jump http://t.co/1SzEGWuOvu http://t.co/ROoMmDgMfb
colsdaddy
29 Aug 14 08:40:16
The American Rose: Nice Try Puerto Rico. Banks Weren't Born Yesterday. http://t.co/vkpOGIgqCw The real issues between $DRL and PR Treasury.
Adam Cole
29 Aug 14 08:23:57
@puertoricoguru Here is the link. Only $DRL "plan" is due after 120 days. See link and pic. http://t.co/VVHc9LtcTB http://t.co/Hj1E2r8eEA
Adam Cole
29 Aug 14 07:53:43
$DRL The American Rose: Nice Try Puerto Rico. Banks Weren't Born Yesterday. http://t.co/IfYdKVk6LH
Adam Cole
29 Aug 14 07:53:04
@puertoricoguru This is a lie. FDIC cannot take over. $DRL 'plan' is due. Just the plan. Not the capital.
PR Guru
29 Aug 14 07:37:22
Unless we hear news on $DRL capital plan, very risky to hold stock over long weekend.FDIC could takeover.Trial contingency might be too much
Stock Market News
29 Aug 14 07:15:20
$DRL: Sector Update: Moderate Gains for Financial Stocks; Doral Financial Sinks ... http://t.co/JIkJwQzuot http://t.co/0DTyD70Sll
CC Investments
29 Aug 14 07:14:08
Excellent article on why Doral could NOT accept Puerto Rico's settlement offer: It's a scam. $DRL http://t.co/eb5TiBV7Cn
BayAreaCoins
29 Aug 14 07:07:09
What am I holding today... $BTC, $HUC (those are my cryptos) $WIN my bread and butter. $DRL for my long shot with a chance of high return!
PR Guru
29 Aug 14 06:15:55
@Jgian1217 $DRL is running out of time with the FDIC. The stock could pop if they sell US operations to meet capital requirements.
John Giangreco
29 Aug 14 06:15:35
RT @WhiteCoatMafia: No $DRL short attack yesterday. Futures up despite Ukraine. Obviously no FDIC seizure today. Anymore failed bear "predi…
John Giangreco
29 Aug 14 06:15:24
RT @Matttherose: Nice Try Puerto Rico. Banks Weren't Born Yesterday. $DRL http://t.co/UFCg2hHKYy Why PR will lose at trial with Doral...
PR Guru
29 Aug 14 06:12:59
@AleMizrahi01 I believe FDIC compliance deadline is today. We should be hearing news today regarding $DRL capital plan or news of extension
RUCASO
29 Aug 14 06:11:01
$DRL Nice article about Doral issue with PR http://t.co/9qXWaAp5X9
Business News
29 Aug 14 05:15:18
$DRL: Doral Financial (DRL) Said It Hasn't Left Negotiations http://t.co/nT6q2Ki6Ok http://t.co/pflBFz0PCo
Adam Cole
29 Aug 14 05:13:27
No $DRL short attack yesterday. Futures up despite Ukraine. Obviously no FDIC seizure today. Anymore failed bear "predictions" this week?
Matt Rose
29 Aug 14 04:38:57
Nice Try Puerto Rico. Banks Weren't Born Yesterday. $DRL http://t.co/UFCg2hHKYy Why PR will lose at trial with Doral...
Charts 123
29 Aug 14 03:52:02
Sell Signal: $ANR $CECO $CHGG $CORT $DRL $EJ $EVRY $EXTR $MDSO $MKTO $NOAH http://t.co/ttt3aKXbEm #stocks
Hereitfirst
28 Aug 14 22:13:16
How to trade $USU $CMG $MNKD $JPM $DRL$WHX$BBY,$TSLA $YHOO $RSO $SPY $VJET $ACRX $DDD $AAPL http://t.co/uTZpFW8a4K
PR Guru
28 Aug 14 18:34:51
$DRL will pop or tank? What do you think?
Market Updater
28 Aug 14 18:15:18
$DRL: [video] Doral Financial Negotiations Over Tax Credit on Verge of Collapse http://t.co/d01MfydxZi http://t.co/lCA0veaV7B
Market Headlines
28 Aug 14 17:15:20
$DRL: DORAL FINANCIAL CORP Files SEC form 8-K, Other Events http://t.co/Wk9P45DWun http://t.co/FktvOBjqlk
Adam Cole
28 Aug 14 17:03:49
Some people would love to see $DRL go down a bit more, so they can buy back in cheaper.
Leilani Salisbury
28 Aug 14 16:34:42
$DRL New Study Examines http://t.co/w7c7jzWtn4
ACE
28 Aug 14 15:50:47
$DRL looks set to peel over -5% tomorrow fugly
$Stocknewsalerts
28 Aug 14 14:04:00
$DRL Doral Financial Corporation Daily Stock Price Summary From our Stock News Alerts App
				
				
  +Follow June 9, 2014 2:27PM
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