The Central Bank has secured High Court orders winding up a credit union in Cork with 3,500 members.

The President of the High Court, Mr Justice Nicholas Kearns, today appointed insolvency practitioners Jim Hamilton and David O’Connor of BDO Ireland as provisional liquidators of Berehaven Credit Union, Castletownbere.

Mr Justice Kearns said he was satisfied to appoint the provisional liquidators.

Paul Gallagher SC , for the Central Bank, had earlier told the judge an orderly orderly wind up of Berehaven Credit Union was “in the the public interest”. Counsel said the Central Bank was also of the opinion the credit union “may be unable to to meet its obligations to creditors”.

Two reviews, conducted in 2010 and earlier this year, identified corporate governance failures which had not been rectified, the court was told.

Counsel said the Central Bank had concerns that unless an orderly winding up process was put in place there was a risk of corporate failure and a “disorderly collapse” of the credit union.

The State deposit guarantee scheme, which guarantees deposits up to €100,000 will apply to depositors with the credit union, he added.

The judge said the Central Bank had sought the winding up orders after “very careful consideration” of the situation.

Earlier, Mr Gallagher told the court the Central Bank had been made aware in 2010 of difficulties in Berehaven Credit Union, founded in 1978. Counsel said a 2010 report revealed irregularities with corporate governance, and issues with its loan book and another review earlier this year showed these difficulties had not been dealt with.

There was now a net deficit in the accounts of €50,000 . There was a capital shortfall of €1.3 million.

The Central Bank has given the credit union every opportunity to address its problems but it has been unable to do so. Attempts by it to voluntarily transfer its business to another credit union did not work out, counsel added.

The least expensive option was to have the company wound up, counsel said.