The Financial Services Compensation Scheme is stepping in to compensate members who had money with the Craigavon, County Armagh credit union.
Approximately 1,600 individuals have a total of about £1.8m with Portadown Diamond Credit Union. Those with less than £1,000 will be instructed to collect their money from a Post Office, while anyone with between £1,000 and £85,000 will be sent a cheque.
Northern Ireland credit unions came under FSCS protection just under a year ago. Portadown Diamond is the first Northern Irish credit union to fail since then.
However, this marks the fourth credit union collapse in as many months following the news that Marches Credit Union, Severn Four Credit Union and the Cornwall and Isles of Scilly Credit Union have all become insolvent.
Earlier this month (18 April), the government announced it would inject £38m into the credit union sector to help it “modernise and grow”.