Administrators abandon Sterecycle autoclave

Creditors of Sterecycle (Rotherham) Ltd are likely to get a dividend from the demise of the business but the amount could depend on the outcome of any talks with the Health and Safety Executive and South Yorkshire Police with regards to legal action following a fatality at the plant in 2011.

However, the autoclave equipment at the site on Sheffield Road, Rotherham will not form part of any asset sales as this has now been formally abandoned by the administrators and passed to the landlord,Andy McGee, formerly of EDS (Euro Dismantling Services).

Last week Mazars LLP, administrators of Sterecycle (Rotherham) Limited, Sterecycle Management Services Limited and Sterecycle Holdings Limited confirmed that the business was to close. The Rotherham site was the only operational facility run by Sterecycle although it had plans for autoclaves in other parts of the UK.

Guy Hollander of Mazars said: Unfortunately, we were unable to achieve a sale of the business as a going concern, with the effect that I had to make the remaining 16 staff redundant and close down the site as of October 8. He explained that a dividend is likely but added: It is not cost-effective for us to continue to try and sell the kit so we have to technically abandon it.

Any dividends payable to creditors could be impacted by a contingent claim in the form of penalties and court costs because of the fatality so the formal winding up of the Rotherham business is likely to be delayed.

Investigation

In January 2011, an explosion in oneof the vessels at the plant resulted in two men being injured, one of whom subsequently died (see letsrecycle.com story). An investigation into the explosion is ongoing and is being led by South Yorkshire Police.

However, it is thought that because of the administration of the business, the Crown Prosecution Service and the HSE might weigh up the costs of any case and likelihood of funds recovery when determining the extent of any legal action.

A spokeswoman for South Yorkshire Police said: Its true that Sterecycle have gone into administration and will unfortunately be closed down. However, South Yorkshire Police, along with Health and Safety Executive are continuing their investigation and evidence will be placed before the CPS for a decision in the near future.

Payment for the autoclave is believed to have been made to the manufacturer, Mayflower, and it is not seeking to recover the specialist equipment. Now, Mr McGee is seen as having the potential to run or sell the facility although he could not be contacted by letsrecycle.com. He has substantial experience in the waste and recycling sector and has interests in businesses such as Sheffield-based Waste Recycling and Destruction.

Observers put the failure of the Sterecycle plant down to various factors including financing and difficulties in securing the markets for compost like outputs. The bulk of the material into the plant came from a grouping of councils Barnsley, Doncaster and Rotherham who are now sending their waste to the Veolia ES energy recovery plant in Sheffield (see letsrecycle.com story).

Support

On the financial front, Sterecycle had received significant financial support in recent years although in the last few months it had run short of funds, trying to raise money in Canada without success. In the UK, backers such as Impax told letsrecycle.com that as a consequence of the administration they had written down their investment. Yorkshire First, Yorkshires investment organisation had also contributed to the plant.

As recently as April this year, Ash Chopra, who led the investment on behalf of Finance Yorkshire, said: The deal is an example of how Finance Yorkshire can co-invest with other financial providers in order for a business to successfully gain the money they need to roll-out their growth plans.

Technology

Speaking exclusively to letsrecycle.com, Tom Shields, the former chief executive of Sterecycle with a background in engineering, said that he believed the technology did have a part to play in the treatment of municipal solid waste.

He said: I am obviously disappointed that in the end after a difficult trading period we had to call in the administrators. It is not right to dismiss autoclaving as a technology as a result of this.

We were creating outputs including recyclates and you also get a compost-like output.

Mr Shields said that while there were issues on the input side he felt the Environment Agency had been too rigid and precautionary in its approach to the compost-like output.

They have a very bureaucratic approach and have a much stricter line than is logical on a number of fronts that lead to decisions that can kill businesses in a number of ways.

The former chief executive explained that in the future AD could be one route for the CLO and that there was a good level of biogas which could be exploited.

One area where the company suffered financially, said Mr Shields, was on recycling. We have taken a big fall in prices, for example in mixed bottles. And, he pointed to other businesses in the waste sector who have also recently spoken of business pressures.

He concluded: I feel confident the technology has enough about it to succeed in the future. I think there will be niche applications and other projects.