Investigations into Rush Credit Union (RCU) revealed significant misappropriation of funds and gardaí have been notified of suspected money laundering, High Court president Mr Justice Peter Kelly was told.
Appointing Jim Luby and Tom Rogers as provisional liquidators of RCU, Mr Justice Kelly said such a move was necessary to address concerns of worried depositors given the credit union’s unhappy financial position.
Among their powers will be to repay deposits, within 21 days, that are guaranteed under the State’s Deposit Guarantee Scheme which guarantees savings of up to €100,000.
The court heard RCU is in a distressed state with net liabilities over assets of some €2m. It has -8.7% reserves which will require to be funded to the tune of €4.73m. Credit unions are required to have at least 10% reserves of total assets.
RCU was established in 1972 and has some 11,457 members with savings worth €24m.
The winding-up application was made by Paul Gallagher, for the Central Bank, who asked that certain material in the petition and affidavits before the court not be publicised.
Mr Gallagher said this was because there may be criminal prosecutions arising and the bank was anxious not to prejudice those matters. The judge granted the order.
H said despite significant engagement and assistance from a number of bodies since 2010 to assist RCU with its difficulties, significant issues had continued, including in relation to internal governance and lending practices. There had also been a significant level of misappropriation of funds, he said.
He referred to an affidavit from Patrick Casey, the Central Bank’s head of resolution for credit institutions, which outlined a number of engagements by the registrar of credit unions, and reviews by accountants Grant Thornton and by the Central Bank itself.
Mr Casey said serious deficiencies were found in relation to a number of matters including control of bank and cash, lending practices, and day-to-day running.
The registrar issued a number of directions in relation to its business activities, said Mr Casey.
Issues arose in relation to a number of matters, including in relation to how a car draw was conducted and certain payments to Revenue.
The court heard there had been no annual meeting called by RCU since 2013, and no dividend paid to members since 2008. If a meeting was called it would mean members would have to be informed of its financial position which could have led to a run on deposits.
Mr Justice Kelly was satisfied a prima facie case had been made out for the appointment of provisional liquidators.
Under the order, the powers of the board are suspended and the liquidators have powers including to make payouts under the Deposit Guarantee Scheme. The court heard the liquidators hope to pay out earlier than the 21 days required under the scheme.
The case is back before the court on November 21.