Doral Financial in San Juan, Puerto Rico, has prevailed in its court battle with the territory's Treasury Department over a substantial tax refund.
The $7.8 billion-asset company said in a press release late Friday that Puerto Rico's Court of First Instance ruled that its tax agreement with the agency is valid.
"We are deeply gratified by the court's ruling," Matthew McGill, a lawyer at Gibson, Dunn & Crutcher who represented Doral, said in the release. "Doral stands ready to work to put this litigation behind us all and to move forward serving the people of Puerto Rico."
Doral and the Puerto Rican government reached an accord in 2012 to reclassify money the company claimed it had over paid in taxes as a prepaid tax asset. Doral pushed for a refund, but the territory's Treasury Department rejected the refund request, stating that the agreement was null for several reasons, including a determination that the refund was barred by a statute of limitations.
Doral responded earlier this year by filing a lawsuit claiming its constitutional rights were violated and that the defendants "acknowledged that Doral was entitled to a refund" in previous agreements.
The company needs the capital after the Federal Deposit Insurance Corp. determined earlier this year that the company could not count Puerto Rican tax receivables as part of its Tier 1 capital, putting it in violation of a consent order. The FDIC has also been pushing the company for certain written plans.
Doral has been selling assets to improve capital and liquidity levels in recent months.
