The High Court has appointed provisional liquidators to Rush Credit Union in north Co Dublin.
The President of the High Court was told that investigations into the credit union had revealed significant misappropriation of funds and gardaí have been notified of suspected money laundering.
Mr Justice Peter Kelly appointed Jim Luby and Tom Rogers as provisional liquidators of RCU, which he said was necessary in order to address the concerns of worried depositors given its unhappy financial position.
The Deposit Guarantee Scheme was activated as part of the application, covering members' deposits up to €100,000.
The Central Bank said compensation payments would be issued to the address held on file by the credit union and there was a statutory obligation to do so within 20 working days.
The court heard that Rush Credit Union is in a distressed state with €2m more in net liabilities than it had in assets.
Credit Unions are also required to have reserves of at least 10% of total assets, however the credit union has reserves of -8.7%.
This would need to be funded to the tune of €4.73m, the court was told.
Rush Credit Union was established in 1972 and has about 11,457 members with savings worth €24m.
The winding up application was made by Paul Gallagher SC, for the Central Bank, who asked that certain material in the petition and affidavits before the court should not be published.
Mr Gallagher said this was because there may be criminal prosecutions and the Bank was anxious not to do anything to prejudice those.
The judge granted the order on the grounds that there was commercially sensitive information which it would not be in the interest of the credit union to reveal.
Mr Gallagher said, despite significant engagement and assistance from a number of bodies since 2010 to assist the credit union with its difficulties, there continued to be issues in relation to internal governance and lending practices.
There had also been a significant level of misappropriation of funds.
Mr Gallagher also referred to an affidavit by Patrick Casey, the Central Bank's head of resolution for credit institutions, which outlined a number of engagements by the Registrar of Credit Unions, 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 of the credit union.
The Registrar issued a number of directions in relation to its business activities, Mr Casey said.
Issues arose in relation to a number of matters, including how a car draw was conducted and over certain payments to Revenue. The credit union notified Revenue and An Garda Síochána under money laundering legislation because of suspected money laundering activities, Mr Casey said.
The court heard there had been no annual meeting called by Rush Credit Union 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 case was made for appointment of provisional liquidators to take over the running of RCU.
The case comes back before the court on 21st November, at which point the Central Bank is set to seek the winding up of the institution.
