CORRECTED-Doral Financial wins round in Puerto Rico legal case, shares jump

Fri Aug 15, 2014 9:23am EDT

(Corrects paragraph three to say that the company sued the government in June and not May)

July 2 (Reuters) - Troubled lender Doral Financial Corp said an appeals court in Puerto Rico reversed a lower court's ruling that it lacked jurisdiction to hear a case stemming from its tax dispute with the island's government.

Doral's shares jumped as much as 70 percent to $6.86 Wednesday on the New York Stock Exchange.

Doral, one of the biggest Puerto Rican banks, sued the government in June for voiding an agreement that required the Treasury Department to pay the company about $230 million in tax refund.

The appeals court said the lower court erred when it ruled that it lacked jurisdiction to hear the case and ordered it to hold a hearing in which the Treasury Department must prove the basis for voiding the agreement.

The company had received a letter from the Federal Reserve Bank of New York in May stating that it must classify the tax agreement as a loss and write off the asset.

Doral, whose business has been affected by a slowing Puerto Rican economy, had said it could sell assets to meet regulatory requirements. (Reporting by Tanya Agrawal and Neha Dimri in Bangalore; Editing by Saumyadeb Chakrabarty)

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.