Doral Financial Asks Extension for Bankruptcy Exclusivity Period

by San Antonio Attorney

Doral Bank in Puerto Rico pleaded the judge for more time to stay in control in addressing its bankruptcy issues as it negotiates with its unsecured creditors on a reorganization plan.

This is Doral Bank’s second time to request an extension of its exclusivity period since last November.  The bank was awarded an approval last November from Judge Shelley C. Chapman of the U.S. Bankruptcy Court in Manhattan to have through Dec. 31, 2015, to file a plan to pay back its creditors.

However, on the day of deadline, Doral again stated that it needed more time for its liquidation process.

The bank has been working with creditors to maintain a yearly $59 million tax benefit, according to court papers.

Doral made its official statement via the court papers that it will create a reorganization plan but will look forward to keep control by February 29.

Last December 2014, Doral’s unsecured creditors filed a case against the Secretary of the Treasury of Puerto Rico, which sought to preserve Doral’s annual tax benefit until 2021. The unsecured creditors hold about $170 million in claims.

Last March, Doral filed for Chapter 11 bankruptcy protection after several years of financial problems especially in inadequate accounting and a rejection claim to a $229 million tax refund.

The bank was declared as the first largest bank failure in the island since April 2010.

This occurrence will cost Doral’s insurance fund, which was paid for $750 million by insurance premiums in banks.

The collapse of Doral’s bank subsidiary and bankruptcy is a domino effect of Puerto Rico’s financial crisis.

Puerto Rico, considered as a United States territory with a Commonwealth government, has $72 billion dollars in total debt due to declining population and rising unemployment.

 

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