Real Time Factual Information on Doral Vs. Puerto Rico

For nearly a decade, the Government of Puerto Rico has acknowledged
its debt to Doral Financial Corporation. The evidence spans three administrations
in Puerto Rico and the debt itself was ratified in several closing agreements,
including a 2013 agreement authorized by the current governor and treasury secretary.

Doral Financial Corporation and Government of Puerto Rico Meet for Trial to Settle Tax Refund Due to Doral

 Chief Counsel Matthew D. McGill: Hacienda’s star witness is “irrelevant”

September 18, 2014
Contact:  Miriam Warren 202-722-2186

SAN JUAN— Following today’s trial in the Doral Financial Corporation v. Hacienda court case, Doral Legal Counsel Matthew D. McGill issued the following statement:

“To begin their case today, the government called as their star witness a former employee of Doral who the court has ruled has nothing relevant to say about the tax agreement that Hacienda is trying to repudiate.  Hacienda’s presentation of an irrelevant witness confirms what Doral has been saying–that there is no evidence to support Hacienda’s attempted nullification of its agreement with Doral.”

“Para comenzar su caso en el día de hoy, el gobierno llamó como su principal testigo a un exempleado de Doral quien la corte ha decidido no tiene nada relevante que decir sobre el acuerdo contributivo que Hacienda está intentando repudiar. La presentación de testigos irrelevantes por parte de Hacienda confirma lo que Doral ha estado diciendo — que no hay evidencia para apoyar el intento de Hacienda de anular su acuerdo con Doral.”

For more information on case of Doral vs. the Hacienda and events leading up to the trial, visit www.DoralPuertoRicoFacts.com.

Doral Financial Corporation is a bank holding company engaged in banking, mortgage banking and insurance agency activities through its wholly-owned subsidiaries Doral Bank, with operations on the mainland U.S. (New York metropolitan area and northwest region of Florida) and Puerto Rico. Doral Financial Corporation’s common shares trade on the New York Stock Exchange under the symbol DRL.

New Statement from Mathew D. McGill, Doral Legal Counsel Ahead of This Week’s Doral v. Hacienda Trial 

September 15, 2014

SAN JUAN — Ahead of this week’s trial in Doral Financial Corporation v. Hacienda court case, Doral Legal Counsel Matthew D. McGill issued the following statement:

“These illegal government-orchestrated attacks on Doral are a desperate and shameful effort to distract people from the real issue: The government owes Doral money and won’t pay. The government’s refusal to live up to its agreement with Doral has damaged its credibility in the markets and, more importantly, has jeopardized the livelihoods of more than 1,000 Doral employees in Puerto Rico. We will prove our case in court this week with evidence—not a smear campaign,” said Mathew D. McGill, Chief Legal Counsel and Gibson, Dunn and Crutcher Partner.

 

Doral Financial Corporation is a bank holding company engaged in banking, mortgage banking and insurance agency activities through its wholly-owned subsidiaries Doral Bank, with operations on the mainland U.S. (New York metropolitan area and northwest region of Florida) and Puerto Rico. Doral Financial Corporation’s common shares trade on the New York Stock Exchange under the symbol DRL. Additional information about the case of Doral Financial Corporation against the Government of Puerto Rico can be found at www.DoralPuertoRicoFacts.com.

Summary Judgment Motion, September 10, 2014 

Find the original, Spanish document here.

Leading Think Tank, New Democratic Network, Releases New Paper by Dr. Robert Shapiro: A Model for Puerto Rico Modernization

August 11, 2014

Today, the influential and well respected New Democratic Network, NDN, released a new paper written by Dr. Robert J. Shapiro, advisor to Doral Financial Corporation.  The paper, To Reclaim Prosperity, Puerto Rico Should Adapt Ireland’s Model for Modernization And Focus on Attracting Investors from Around the World, notes that Puerto Rico’s program for economic growth has clearly failed and suggests that the Commonwealth should adopt a version of Ireland’s economic approach, which targets public investments, tax preferences and low-cost access to markets to attract foreign direct investments.

Simon Rosenberg, President of NDN, said the following in a press release about the paper:

“NDN is proud to release this new paper which we hope will become an important part of the debate about Puerto Rico’s future.  The commonwealth’s economic course is unsustainable.  Dr. Shapiro offers a powerful vision for how Puerto Rico can regain control over its own destiny, and stride confidently into the far more competitive world of the 21st century.”

Find the full text of the paper here and on our Documents page.

New Study Examines the Costs to Puerto Rico of Nullifying the Government’s Agreement with Doral 

 Dr. Shapiro: Treasurer’s Actions Could Increase the Likelihood of Puerto Rico Defaulting on its Debts

August 26, 2014

WASHINGTON – Dr. Robert J. Shapiro, chairman of the advisory firm Sonecon and former U.S. Undersecretary of Commerce for Economic Affairs, held a media teleconference today with Doral Chief Legal Counsel and Gibson, Dunn and Crutcher Partner Matthew D. McGill to discuss the Government of Puerto Rico’s recent abandonment of negotiations with Doral Financial Corporation.

On the call, Shapiro announced the release of his latest study– A “Penny-Wise and Pound-Foolish” Policy: The Costs to Puerto Rico of the Treasurer Nullifying its Agreements with Financial Institutions, Including the Possibility of a Sovereign Debt Default – which concludes that the Puerto Rican government’s failure to settle with Doral could lead to losses in investment, economic growth, and revenues that will far exceed the cost of simply paying Doral what the company is owed.

“It is an expensive proposition for Puerto Rico to renege on its agreements, and as a result, the Government is squandering what little credibility it has left with investors. It is the people of Puerto Rico that will bear the brunt of the costs. Governor Padilla can be a leader – he can resolve this, and I sincerely urge him to do so.”

Regarding the failed negotiations, McGill described the Doral legal team’s disappointment with Hacienda’s abandonment of negotiations, but noted its confidence in the subsequent trial.

“The government has walked away from an agreement and has sent us back to the course of litigation and a trial. It is a disturbing trend and an unfortunate result because there could have been an amicable resolution to this matter. The government owes Doral money and the government does not want to pay. We will go to court to make them pay.”

Dr. Shapiro’s paper, as well as a recording of the call, is available on the Doral Puerto Facts Website, www.doralpuertoricofacts.com , which is a resource for information regarding the Doral Financial Corporation, LLC legal case against the Puerto Rican government.

Doral Financial Corporation is a bank holding company engaged in banking, mortgage banking and insurance agency activities through its wholly-owned subsidiaries Doral Bank, with operations on the mainland U.S. (New York metropolitan area and northwest region of Florida) and Puerto Rico. Doral Financial Corporation’s common shares trade on the New York Stock Exchange under the symbol DRL. Additional information about the case of Doral Financial Corporation against the Government of Puerto Rico can be found at www.DoralPuertoRicoFacts.com.

“Penny-Wise and Pound-Foolish” Policy: The Costs to Puerto Rico of the Treasurer Nullifying Commonwealth Agreements With a Financial Institution, Including the Possibility of a Sovereign Debt Default

By Robert Shapiro, August 2014

Introduction

Puerto Rico’s Government currently faces perilous conditions, mostly of its own making. In June 2014, Treasurer Melba Acosta Febo nullified a long-standing Agreement between the Commonwealth and the Doral Financial Group regarding Doral’s past tax overpayments and the agreed-upon resolution providing Doral with tax credits totaling $230 million over five years. Governor Alejandro García-Padilla has not commented on the Treasurer’s actions, and the dispute is currently before Puerto Rico’s courts. Those actions pose a danger to the Island’s prosperity, because they raise serious questions about whether the Government stands behind its legal commitments and contracts. Puerto Rico’s economy and per-capita income have contracted for nearly a decade, and business investment has been seriously depressed for at least as long. If foreign and native now conclude that the Government may not honor its own contracts, flows of financial and direct investments in the Commonwealth will worsen further and seriously impair Puerto Rico’s conditions and outlook. Furthermore, bond rating agencies already have downgraded Puerto Rico’s sovereign debt to junk status. The Treasurer’s actions, in effect, amount to Puerto Rico defaulting on its debt to Doral. If those actions further exacerbate investors’ concerns about Puerto Rico’s credit-worthiness, the Commonwealth Government could be forced to formally default on its sovereign debt.

This essay will examine the costs of the Commonwealth’s current course. First, we will assess Treasurer Acosta’s claim that the Government cannot afford to provide the tax credits it pledged to Doral in their Agreements. The data will demonstrate that by various measures, the economic costs of fulfilling those agreements are very small. We also will analyze the additional costs for Puerto Rico if the actions against Doral contribute to the Commonwealth’s formal sovereign debt default. Once again, the data will demonstrate that if the Government is forced to default, the costs to the Island’s economic growth, revenues and interest costs on government bonds would equal or exceed the costs of the Government honoring its commitment to Doral. The costs in growth alone would come to $158 per-person over two years for every woman, man and child or, in net present value terms, nearly $137 per-Puerto Rican resident.

View full paper here.

Doral Chief Legal Counsel and Dr. Robert Shapiro Discuss Puerto Rico’s Abandonment of Settlement Agreement and Forthcoming Trial (Audio)

Find the audio recording of the teleconference here.

Statement by Dr. Robert Shapiro Regarding Recent Developments in the Negotiations Between Doral and Puerto Rico

Shapiro to Release New Study on Puerto Rico’s Ailing Economy during Media Teleconference Tomorrow

(WASHINGTON) In response to recent developments in negotiations between Doral Financial Corporation and the Treasury Department of Puerto Rico, the noted economist Dr. Robert Shapiro, an advisor to Doral, had this to say:

“It’s an expensive proposition for Puerto Rico to renege on its agreements, and the government should honor its agreement with Doral so that it can resolve this matter and restore some credibility with financial markets.”

In a forthcoming analysis, Dr. Shapiro concludes that the Treasury Department’s moves to abandon a tax agreement with Doral have already imposed new costs on Puerto Rico through its lower bond ratings; and if the dispute contributes to a debt default by the Commonwealth, that will cost the Island and its citizens much more in lost investment, slower economic growth, and reduced revenues than simply paying Doral what the company is owed.  Dr. Shapiro will outline this analysis on a call tomorrow.

DATE:              Tuesday, August 26, 2014

TIME:               11:00 a.m. EDT

SPEAKER:         Dr. Robert Shapiro, Co-founder of Sonecon; former U.S. Undersecretary of Commerce for Economic Affairs

DIAL-IN:           866-952-1908; Conference ID: DORAL

RSVP:               Ted Greener (tgreener@dcigroup.com; 202-572-6209)

Doral Financial Corporation is a bank holding company engaged in banking, mortgage banking and insurance agency activities through its wholly-owned subsidiaries Doral Bank, with operations on the mainland U.S. (New York metropolitan area and northwest region of Florida) and Puerto Rico. Doral Financial Corporation’s common shares trade on the New York Stock Exchange under the symbol DRL. This briefing is supported by Doral Financial Corporation Additional information about the case of Doral Financial Corporation against the Government of Puerto Rico can be found at www.DoralPuertoRicoFacts.com.

New Statement from Doral Legal Counsel Matthew D. McGill Regarding Doral Negotiations with Hacienda

August 22, 2014

SAN JUAN – In response to recent developments in the negotiations between Doral Financial Corporation and the Puerto Rico Treasury Department, Matthew D. McGill of Gibson, Dunn and Crutcher issued the following statement:

“Doral has not left the negotiations.  The Treasury Department attempted on Thursday to introduce into the negotiations so-called “business points” conceived by its new outside counsel, Foley & Lardner, that were contrary to the provisions of the agreement reached and sworn to by the parties in front of Judge Perez-Perez of the Court of the First Instance.  Foley & Lardner recently represented Doral in a related matter and that raises a conflict of interest.  It has a duty of loyalty to its client, Doral, from acting adversely to Doral.  For that reason, Doral sought guidance from Judge Perez-Perez as to how to proceed.  Judge Perez-Perez ruled that the parties will continue negotiations today under her supervision, without the participation of Foley & Lardner, and according to the terms previously agreed by the parties.”

Doral Financial Corporation is a bank holding company engaged in banking, mortgage banking and insurance agency activities through its wholly-owned subsidiaries Doral Bank, with operations on the mainland U.S. (New York metropolitan area and northwest region of Florida) and Puerto Rico. Doral Financial Corporation’s common shares trade on the New York Stock Exchange under the symbol DRL. Additional information about the case of Doral Financial Corporation against the Government of Puerto Rico can be found at www.DoralPuertoRicoFacts.com.

###

Government of Puerto Rico Tries to Delay Trial Schedule with Doral Financial Corporation 

July 24, 2014

“Delay Tactics” Indicate the PR Government cannot meet the burden of proof ordered by the court to show fraud, malfeasance and misrepresentation on the part of Doral

SAN JUAN, Puerto RicoJuly 24, 2014 – Today, the Government of Puerto Rico continued its delay tactics to escape the burden of proving fraud or malfeasance in the case of Doral vs. Hacienda. The Hacienda motioned to delay the trial schedule in response the Puerto Rico Supreme Court’s ruling that the trial with Doral must happen on an expedited basis.

Doral counsel Matthew D. McGill, partner at Gibson, Dunn & Crutcher issued the following statement:

“The Puerto Rican government is becoming increasingly desperate as it attempts to avoid paying the bank a debt that has been acknowledged by successive administrations over the last eight years. The government continues leveling unfounded accusations against Doral and has engaged in delay tactics in and out of court because it knows that it cannot meet the burden of proof that the court has ordered. In the process, the government is sending a chilling message to potential investors considering Puerto Rico as a place to do business. The government has it within its power to undo this damage by negotiating a solution with Doral that is fair for all parties. Doral has accommodated both the court’s and the government’s requests at every turn. We are simply asking for the same treatment in return.”

Doral Financial Corporation is a bank holding company engaged in banking, mortgage banking and insurance agency activities through its wholly-owned subsidiaries Doral Bank, with operations on the mainland U.S. (New York metropolitan area and northwest region of Florida) and Puerto Rico. Doral Financial Corporation’s common shares trade on the New York Stock Exchange under the symbol DRL. Additional information about the case of Doral Financial Corporation against the Government of Puerto Rico can be found at www.DoralPuertoRicoFacts.com.

###

Doral Financial Corporation Commends Supreme Court For Ruling that the PR Court of First Instance Must Expedite The Case Doral Brought Against Government 

July 22, 2014

Legal Counsel Matthew D. McGill Welcomes Court Hearing, Encourages Government to Negotiate

Mr. McGill will be available for a media teleconference at 11:30am EDT to discuss the case of Doral vs. the Hacienda

DIN: 866-952-7534 ; Code: DORAL

Responding to a ruling by the Supreme Court of Puerto Rico ordering the Court of First Instance to expedite an evidentiary hearing in Doral’s case against the Hacienda, Counsel for Doral Financial Corporation, Matthew D. McGill of Gibson, Dunn & Crutcher, issued the following statement:

“The Puerto Rico Supreme Court has recognized once again the important public interest and urgency of this case and has ordered the court to act diligently and immediately. Now the burden is on government to demonstrate the basis for its decision to arbitrarily nullify its longstanding tax agreement with Doral. While we are confident that our case will prevail in court, we hope that the government of Puerto Rico will take this opportunity to reconsider its ill-conceived decision to abandon its contractual obligation to Doral. And we continue to urge the government to negotiate a solution that is fair for all parties and that is in accordance with a series of tax agreements over the last eight years that have continually ratified the government’s debt to Doral.”

A scheduling order is soon expected from the Court of First Instance. To retrieve a copy of the court’s decision, visit www.doralpuertoricofacts.com.

To join the media teleconference with Matthew D. McGill on Wednesday at 11:30am EDT, please RSVP to mwarren@dcigroup.com. The dial-in information is 866-952-7534; Code: DORAL.Doral Financial Corporation is a bank holding company engaged in banking, mortgage banking and insurance agency activities through its wholly-owned subsidiaries Doral Bank, with operations on the mainland U.S. (New York metropolitan area and northwest region of Florida) and Puerto Rico. Doral Financial Corporation’s common shares trade on the New York Stock Exchange under the symbol DRL. Additional information about the case of Doral Financial Corporation against the Government of Puerto Rico can be found at www.DoralPuertoRicoFacts.com.

###

Doral Financial Corporation Chief Legal Counsel Matthew D. McGill Warns of a Campaign of Intimidation and Falsehoods Against Doral

July 11, 2014

WASHINGTON, DC — Today, Matthew D. McGill of Gibson, Dunn & Crutcher issued the following statement:

“In the wake of another court decision rejecting the García Padilla Administration’s effort to nullify its agreement with Doral, the Administration’s allies now seem to be readying an alarming campaign of innuendo, falsehoods and intimidation. In the absence of evidence that could justify its nullification of Doral’s contract, the García Padilla Administration seems determined to manufacture it, as we saw in the sham hearing conducted this week by Representative Baez, who already has announced his intention to run Doral out of business.  It is time for the García Padilla government and its allies to stop walking away from their obligations, stop their campaign of intimidation, and start negotiating a resolution to this matter.” 

Doral Financial Corporation is a bank holding company engaged in banking, mortgage banking and insurance agency activities through its wholly-owned subsidiaries Doral Bank, with operations on the mainland U.S. (New York metropolitan area and northwest region of Florida) and Puerto Rico. Doral Financial Corporation’s common shares trade on the New York Stock Exchange under the symbol DRL. Additional information about Doral Financial Corporation can be found on the company’s website at www.doralfinancial.com.

###

Congressmen Matt Salmon (Az-05) and Jeff Duncan (SC-03) Write to Governor Padilla Regarding the Nullification of the Agreement with Doral 

July 11, 2014

A key excerpt:

“They compared the situation with cases in other countries, such as Argentina, citing that they stopped paying their national debt in 2001 and they mentioned Venezuela’s actions when they expropriated private investments and transferred them to the government. “These actions do not encourage private investors to take on financial risks in these countries when considering investments in this hemisphere. As such, we are concerned about the reports that we have heard regarding PR’s recent actions,” reiterated Salmon and Duncan in the letter.”

View the Letter Here 

###

Doral Financial Corporation Chief Legal Counsel Matthew D. McGill Responds to Bank’s Win in the Puerto Rico Court of Appeals  

July 2, 2014

WASHINGTON, DC — Today, Matthew D. McGill issued the following statement in response to Doral Financial Corporation’s win in the Puerto Rico Court of Appeals:

“We are pleased with the thoughtful, thorough and unanimous decision of the Court of Appeals of Puerto Rico. This decision is a vindication for the rule of law in Puerto Rico. Yesterday’s decision recognizes that Doral’s contract with the commonwealth is presumptively valid. As the trial court, the Court of First Instance previously recognized the Hacienda’s earlier attempt to nullify Doral’s agreement violated Puerto Rico law. As we have said in the past, there is simply no basis for the Hacienda to attempt again to nullify this agreement.

“In recent days we have seen García-Padilla Administration turn further away from the rule of law and towards the dead-end path of abrogating agreements and violating contracts. We see that in the new debt restructuring law, we see it in the commentary of rating agencies like Moody’s who are expressing concern about the García-Padilla Administration’s willingness to abide by its agreements and we see it in the García-Padilla Administration’s increasingly strained attempts to nullify its agreement with Doral. This is a dead-end path. Rather than breaching contracts, the García-Padilla Administration should sit down with its counter parties and negotiate a resolution with Doral that moves both parties forward.

“We express our most sincere hope that the García-Padilla administration will take us up on our offer to negotiate a resolution but if they do not we are prepared to proceed in court and we will prevail. The Hacienda has no ability to sustain the burden of proof that it must carry in a court of law that its agreement with Doral is invalid.”

###

Audio: Doral Financial Corporation Wins Appeal on Lawsuit Against Hacienda, Media Update Call with Chief Legal Counsel 

July 2, 2014

WASHINGTON, DC — Today, Matthew D. McGill issued the following statement in response to Doral Financial Corporation’s win in the Puerto Rico Court of Appeals:

“We are pleased with the thoughtful, thorough and unanimous decision of the Court of Appeals of Puerto Rico. This decision is a vindication for the rule of law in Puerto Rico. Yesterday’s decision recognizes that Doral’s contract with the commonwealth is presumptively valid. As the trial court, the Court of First Instance previously recognized the Hacienda’s earlier attempt to nullify Doral’s agreement violated Puerto Rico law. As we have said in the past, there is simply no basis for the Hacienda to attempt again to nullify this agreement.

Click Here to Listen to Full Recording

Doral Financial Corporation Wins Appeal on Lawsuit Against Hacienda, Announces Media Update Call with Chief Legal Counsel 

July 2, 2014

Media Teleconference: Doral Lead Legal Counsel Available for Media at 12:30pm EDT, Wednesday, July 2, 2014.

San Juan, Puerto Rico – Doral Financial Corporation Lead Legal Counsel Matt McGill of Gibson, Dunn & Crutcher will hold a media teleconference call on Wednesday, July 2, 2014, at 12:30pm EDT to provide an update on the Doral case against the Government of Puerto Rico.

Click here for more details on media teleconference

Robert Shapiro Presentation 

June 24, 2014

How Efforts by Puerto Rico’s Treasurer to Nullify Tax Agreements with a Local Financial Institution Will Aggravate the Commonwealth’s Economic Problems

Watch Dr. Robert Shapiro’s 

Shapiro Defends Doral 

El Nuevo Dia, June 25, 2014 

The former undersecretary of Commerce of the US and economist, Robert Shapiro, spoke before the press yesterday at an Isla Verde hotel, to present its most recent essay where he analyzes the importance of the rule of law and compliance with contracts for foreign investment.

Shapiro established in the document, specifically, how the efforts by Hacienda to annul the tax agreements with Doral can aggravate the country’s economic problems.

This is not the first time that the federal undersecretary speaks about the matter. Just a few weeks ago Shapiro spoke publicly about the agreement between Hacienda and Doral to reaffirm that if the payment of the $232M refund that the government allegedly owes the bank is met, this could act in favor of the Government of PR.

View Full English Translation

Congressman intercedes for Doral before AGP

Ileanaxis Vera, El Vocero, June 25, 2014

Scott Garrett made a call to the Governor of PR, Alejandro Garcia Padilla, to reconsider the “unfortunate and mistaken” action of annulling an agreement between DFC and Hacienda.

The president of the subcommittee of capital markets and enterprises sponsored by the House of Representatives of the US Congress, Scott Garrett, made a call to the Governor of PR, Alejandro Garcia Padilla, to reconsider the “unfortunate and mistaken” action of annulling an agreement between DFC and Hacienda, an action – he emphasized – that moves away from traditional commercial practices.

Garrett maintains in his letter that he waits with interest “to work closely with the Governor in this important matter to assure that this problem is resolved in an adequate manner.”

View Full English Translation

s about the matter. Just a few weeks ago Shapiro spoke publicly about the agreement between Hacienda and Doral to reaffirm that if the payment of the $232M refund that the government allegedly owes the bank is met, this could act in favor of the Government of PR.

View Full English Translation

Shapiro: the dispute between Doral and Hacienda needs to be resolved

Noticel, June 25, 2014

Coinciding with some warnings made in the open letter penned by Republican Congressman Scott Garrett, Robert Shapiro, undersecretary of commerce in former President Bill Clinton’s administration, warned the government of the need to resolve the legal dispute between Doral Bank and the Treasury Department to avoid losing investor trust.

Doral Bank filed a complaint against the government after the Treasury Department, by order of Secretary Melba Acosta, voided the agreement it had undertaken to reimburse the Bank $229 million dollars in tax overpayments.

View Original Article

Doral Case Weakens Investor Confidence

Carlos Antonio Otero, El Vocero, June 25, 2014

The Treasury Department continues maintaining it acted correctly by voiding its agreement because it was no longer pertinent.

Faced with Puerto Rico’s precarious economic situation, the government needs to take ad hoc measures to boost development based on investor confidence and put aside practices like the one that is putting the future of the financial institution Doral Bank in check.

View Original Article

Case San Juan Press Conference: Dr. Robert Shapiro to Release Analysis that Shows PR Government’s Move to Nullify Its Agreements with Doral Financial Corporation Has Alarming Economic Implications

Click Here to view the Press Conference Details

En Español

Opinion: Financial Storm in Puerto Rico

Click Here to view full article

By Jaime Daremblum

June 23, 2014

While Puerto Rico generally evokes images of tropical beauty, the view today is unfortunately clouded over by extreme financial woes, $70 billion in public debt. As a result, Puerto Ricans carry the load of very real competitive disadvantages, including a stagnant economy and a lack of investment, spurred by an apathetic banking community.

To remedy this unfortunate situation the Governor’s office can and should take deliberate steps to make good on its outstanding financial obligations and restore confidence in Puerto Rican investment. In doing so, it will send a clear message: elected officials in Puerto Rico are dedicated to a full recovery. If avoided, the road to salvation will continue to be sabotaged by the administration in San Juan.

Puerto Rican Supreme Court Rules Appellate Court Must Hear Doral Case

Click Here to view the full complaint

En Español

Press Release: Doral Files Appeal with Puerto Rico Supreme Court

Click Here to View Press Release

Press Release: Puerto Rico Court of First Instance Rules the PR Government Must Provide Valid Basis for Annulment 2012 Closing Agreement

Click Here to View Press Release

Audio: Doral Legal Media Update (6/11/2014)

Click Here to Listen to the Recording 

Highlights from Mr. Matthew D. McGill’s Remarks:

“On Friday afternoon the Supreme Court notified the trial court to commence an evidentiary hearing beginning no later than Thurs, June 12, and to render a judgment no later than June 26. This puts the case on an extremely expedited track. Today, we filed a response to the government’s motion to dismiss the case. We look forward to the opportunity to having our case heard and to the start of the hearing tomorrow.”

McGill also addressed news reports in the Puerto Rico’s media that say the Puerto Rico Department of Justice is considering an investigation into Doral, at the request of Doral’s regulator, Office of the Commissioner of Financial Institutions (OCIF).

“We haven’t heard directly from the PR DOJ that they are considering an investigation, but if these media reports are correct, this is a deeply concerning development because it looks and feels quite like retaliation against Doral for the exercise of its legal remedies – indeed, legal remedies the PR Supreme Court has ordered be heard and  resolved on an expedited basis. Our focus is not distracted. We are preparing for tomorrow’s hearing. The courts in Puerto Rico will ultimately resolve definitively the claims by Doral that its contract is valid and enforceable.”

Press Release: Doral Financial Corporation Legal Team to Discuss Recent Developments in Lawsuit Against Puerto Rican

Click Here to View Press Release

Press Release: Dr. Shapiro: The Treasury Secretary Has Unilaterally Abandoned the 2012 Agreement with Doral

Click Here to View Press Release

Press Release: Doral Financial Corporation Welcomes Puerto Rico Supreme Court

Click Here to View Press Release

June 5 Doral Legal Media Call Replay

Click here to listen

Press Release: Doral Financial Corporation Files Lawsuit Against Puerto Rican Government

Click here to view the press release

En Español

English Translation of Doral Financial Corporation Complaint in Court of First Instance San Juan

Click here to view the full complaint

English Translation of Doral Financial Corporation Writ of  Certification

Click here to view the full Writ of Certification

Glassman: Puerto Rico has shown poor judgment in its economic decisions

Danica Coto, Asssociated Press, May 28, 2014
Correlation between government’s large debt load and its attitude toward Doral, economist says Although there is great investor interest in Puerto Rico as the “Singapore of the Caribbean,” the island’s large debt load and government’s insistence on issuing more debt amid a marathon recession— and potentially not standing by its agreements—sends a troubling message to the investment community. That’s the somber warning by stateside economist, scholar, diplomat & journalist James K. Glassman, during an exclusive interview with CARIBBEAN BUSINESS.

Read the full article here

Puerto Rico: Is this any way to run an island

Arturo C. Porzecanski, The Hill, May 29, 2014
As the Obama administration and leading figures in Congress weigh options to address the fiscal calamity in Puerto Rico, they are surely mindful of the need to avoid what could yet become a debt crisis that would make Detroit’s fiscal woes look like mere child’s play. Indeed, recent events on the island suggest that the time has come for the president’s Task Force on Puerto Rico to advise the Commonwealth on how to navigate the current difficulties without making matters worse.

Read the full article here

Puerto Rico Bank, Government Clash Over $230M

Jose L. Carmona, Caribbean Business, May 29, 2014
Puerto Rico’s government and one of the island’s biggest banks are locked in a heated battle over $230 million as both sides struggle to regain their financial footing in a wobbly economy. The dispute between the Treasury Department and Doral Financial Corp. escalated this month when the government announced it was nullifying a multimillion-dollar agreement with the bank, leading a former top U.S. economic official advising the bank to warn on Tuesday that such a move would further spook investors.

Read the full article here

The Top 5 FAQs

Question: Why did Doral file this legal action against the Government of Puerto Rico instead of trying to resolve the matter at the negotiating table?

Answer: The administration of Governor Alejandro García Padilla does not recognize its legal obligation to repay its $229 million debt to Doral. Three successive administrations in Puerto Rico have acknowledged the government’s legal obligation to repay Doral for its tax overpayment.
Doral has approached the Government with a diplomatic solution. Nevertheless, our institution has an obligation to protect its rights, as well as the interests of its stakeholders, including its counterparties, bondholders, preferred shareholders, stockholders, employees and customers.

Question: What does this lawsuit mean for Doral’s 1,000+ employees, 300,000 customers, as well as its stockholders, preferred holders and debt holders?

Answer: Doral’s various stakeholders should be assured that our bank will continue serving them as it always has. In fact, the lawsuit filed by Doral demonstrates the bank’s commitment to protect itself and its various stakeholders against the arbitrary actions of the administration of Governor Alejandro García Padilla.

Question: How long does Doral expect this dispute to be litigated in the courts?

Answer: Doral’s hope continues to be that the administration of Governor Alejandro García Padilla will come to the negotiating table and work with the bank to craft a solution under which the government pays Doral a debt that successive Puerto Rican administrations, including Mr. García Padilla’s, have legally acknowledged.

Question: What is the FDIC’s role in this matter?

Answer: The FDIC determined that Doral may no longer include the tax refund to which it is legally entitled from the Government of Puerto as part of the Tier 1 Capital requirements imposed by agency.

Question: What is Doral’s response to the FDIC’s determination?

Answer: Doral Bank is actively exploring a number of strong options as it puts together a revised capital plan within the 120-day period that the FDIC gave the bank to come into regulatory compliance. In the meantime, its customer deposits are insured by the FDIC for up to $250,000 per depositor, the maximum allowed under the law.

Read the full list of FAQs here.

The Top 5 Myths vs Facts

Myth: The government of Puerto Rico does not owe Doral a tax refund resulting from tax overpayment because Doral never made any such payment.

Fact: Doral has provided the Government of Puerto Rico canceled checks and copies of tax returns as evidence of tax overpayment by Doral.

Myth: Doral’s claim to more than $200 million in overpaid taxes is based on a legally questionable agreement between the bank and the Government of Puerto Rico.

Fact: Three successive administrations in Puerto Rico have acknowledged the government’s legal obligation to repay Doral for its tax overpayment. The documents demonstrating this span nearly 8 years. The debt was ratified in several Closing Agreements, including a 2013 agreement authorized by the current treasury secretary of Governor Alejandro García Padilla.

Myth: Doral submitted documents claiming a refund after the statute of limitations for filing such a claim had elapsed; therefore, Doral is not entitled to a refund.

Fact: The statute of limitations is not relevant to this case because Puerto Rico’s debt to Doral was ratified in numerous closing agreements by the government as recently as 2013.

Myth: Doral is now demanding payment of more than $200 million from the Government of Puerto Rico without regard for the fact that the government is teetering on fiscal insolvency.

Fact: Doral has proposed a range of options that help the Government fulfill its legal obligations to Doral within a reasonable timetable that takes into account the fiscal constraints the government is under.

Myth: Doral has been in imminent danger of closing since The FDIC determined that Doral may no longer include the tax refund to which it is legally entitled from the Government of Puerto Rico as part of the Tier 1 Capital requirements imposed by the regulator.

Fact: Doral Bank is actively exploring a number of strong options as it puts together a revised capital plan within the 120-day period that the FDIC gave the bank to come into regulatory compliance. In the meantime, its customer deposits are insured by the FDIC for up to $250,000 per depositor, the maximum allowed under the law.

Read the full list of Myths vs Facts here.