High Court approves sale of Charleville Credit Union's loan book

The President of the High Court, Mr Justice Peter Kelly, approved the sale proposals put before him today by the joint liquidators of the credit union.

In seeking approval, Declan Murphy BL, for the liquidators, said the market had been "truly tested" with due diligence and the liquidators recommended acceptance of the sale as in the best interests of creditors.

The identity of the purchaser was not disclosed in court.

Mr Justice Kelly said the evidence was the loan book consists of live and delinquent loans.

While the latter were previously written off by the credit union from an accounting perspective, they were still due to the credit union from borrowers, he said.

The sum involved was about €14m and the loan book comprises all loans except those beneficially owned by the Irish League of Credit Unions, (ILCU) he noted.

He said 11 parties had expressed interest in acquiring the loan book and six offers were received before the deadline of which five were invited to participate in a second round of bidding.

A preferred bidder was identified, its offer was the highest one received in relation to the live and delinquent loans and it was given preferred bidder status, he said. He was satisfied the process was fair and set out to get the best price and the preferred bidder was the entity that offered the best price.

After due diligence, a conditional contract was entered into on March 13, 2018, and the completed agreement had been put before the court, he said.

He was satisfied the liquidators have behaved with "perfect propriety and commercial good sense" and in a sensible commercial way. There were many disadvantages in their trying to recover the loans themselves as such a process could take years, incur more costs and would not swell the funds available for creditors.

Charleville Credit Union was placed into liquidation in November 2017 by the High Court following an application by the Central Bank. Accountants Jim Hamilton and David O'Connor of BDO were appointed joint liquidators.

The lender had been under close regulatory supervision for years. It had been unable to raise and keep its cash reserves at the required level of 10% of assets, despite receiving a €8m bailout from the ILCU and attempts to merge with other credit unions also failed.

Mallow and Kilmallock Credit Unions both extended their operations to cover the town after Charleville Credit Union was shut down.

Since the appointment of provisional liquidators, the Deposit Guarantee Scheme, administered by the Central Bank, has issued compensation payments to around 10,900 members of Charleville Credit Union.

The total compensation paid amounts to €39.2m, representing more than 99% of depositors covered by the scheme.