The non-performing loan book of the wound-up Rush Credit Union in Dublin is to be sold following an order from the president of the High Court.

Mr Justice Peter Kelly was satisfied it would be sensible to sell the loans, which he was told have a par value of €5.2 million, rather than the joint liquidators of the credit union trying to collect them.

The court last month approved the sale of the performing loan book by the liquidators Jim Luby and Tom Rogers, who had been appointed by the court on the application of the Central Bank.

The credit union’s Sandy Road premises in Rush has been sold for €1 million, the court heard.

Mr Justice Kelly said the Central Bank, which applied for the winding-up order last November over a number of failures in the way the credit union had been run over the years, is now its largest creditor because it funded the Deposit Guarantee Scheme which ensured depositors were paid.

Fair offer

The Central Bank had indicated it was satisfied that a fair market value offer had been made for what was described as the “delinquent” loan book and agreed it should be sold rather than the liquidators having to go through the cumbersome, time-consuming and expensive collection process, he said.

There were three bidders and the highest was chosen, the court heard.

The judge was satisfied this was a much more sensible way to go as the collection process could also delay the conclusion of the liquidation.

The terms of the sale provided that if the purchaser obtained a sum in excess of the value of the non-performing loans, that excess would be returned to the liquidators, but, if not, the purchase monies will be paid in any event.

Declan Murphy, for the liquidators, said a limited number of loans, which were not significant, are under investigation.

Restriction orders

Issues in relation to restriction orders under company law which could be sought by the Office of the Director of Corporate Enforcement have also yet to be dealt with, he said. There is a separate legal action involving another credit union over whether such restriction orders can apply to credit unions.

Mr Justice Kelly granted the order permitting the sale.

Some €22.3 million was paid from the Deposit Guarantee Scheme to Rush Credit Union’s members, numbering around 9,700.

In seeking its winding-up, the Central Bank said the reasons for its failure had manifested over an extended period of time. It included issues relating to governance, internal controls, lending practices and valuation of its premises.

Despite having been given an opportunity to address concerns, the Central Bank decided this had not been adequately done.