Less than two weeks after the Federal Deposit Insurance Corp. ordered the closing of its banking arm, Doral Financial Corp. announced Wednesday that it has filed for chapter 11 bankruptcy in the U.S. Bankruptcy Court for the Southern District of New York.
The company intends “to wind-down its businesses, liquidate its assets, and seek approval of a plan of liquidation. Doral Financial Corp. also intends to continue to pursue causes of action on behalf of its creditors.”
On Feb. 27, the Office of the Commissioner of Financial Institutions of Puerto Rico appointed the FDIC as receiver of Doral Bank. Prior to that change, Doral Financial Corp. owned 100 percent of the equity in Doral Bank, which was its primary asset.
On that date, the FDIC ordered Doral Bank’s closing and reached an agreement with Banco Popular de Puerto Rico to acquire $3.25 billion of the troubled bank’s assets. In turn, Popular entered into an agreement with FirstBank to operate and assume the deposits of 10 former Doral Bank branches in Puerto Rico, as well as approximately $600 million in deposits and a mortgage loan portfolio of $300 million.
Doral Financial Corp.’s primary assets are deposit accounts, asset-backed loans, real estate owned properties in Puerto Rico, which it acquired through loan foreclosures, and various contractual rights under pre-bankruptcy agreements.
The company also owns Doral Insurance, a non-debtor insurance agency, Doral Recovery Inc. (Doral Recovery I), and Doral Properties Inc. (Doral Properties), which have not filed for chapter 11 bankruptcy.
Ropes & Gray LLP is serving as DFC’s bankruptcy counsel, and Zolfo Cooper LLC is acting as DFC’s financial advisor.