Financial documents relating to the demise of Durham County Waste Management Company Limited (DCWM) and its subsidiary Premier Waste Management Ltd have revealed a pension fund shortfall of 12.5 million as part of its overall 19 million debts.
The businesses went into a planned liquidation at the beginning of July and liquidators KPMG anticipate that creditors of DCWM and Premier Waste Management may receive between 27 and 42 pence in the pound respectively.
DCWM and Premier Waste Management Ltd were owned jointly by Durham county council and Darlington borough council and had run the countys CA sites, waste collections, treatment and haulage since 1993.
However, as part of its aim to divert more waste from landfill, the county council awarded a 112.8 million eight-year contract to SITA UK in February 2013 to treat around 140,000 tonnes of residual household waste per year (see letsrecycle.com story).
As a result of SITA winning the contract, the DCWM and Premier Waste Management entered Company Voluntary Arrangements (CVAs) from February 2013 which allowed them to trade until their contracts ended on May 31.
Under the terms of the CVAs, 80% of the 19 million owed was compromised in the CVA. The remaining 20% – around 4.2 million – of the money owed remains as a liability which can be claimed by creditors in the liquidation.
According to KPMG, had the companies been liquidated immediately in February, the returns to creditors would have been significantly lower.
Mark Firmin and Howard Smith of KPMG were appointed joint liquidators of DCWM earlier this month (July 1). Mr Firmin said that after the contract was awarded to SITA UK, it was no longer financially viable for DCWM and its subsidiary to continue.
Mr Firmin added: The CVAs were a tool for achieving an orderly wind down of the companies and have enabled a much smoother transfer of services back to the council and new operators than would otherwise have been envisaged under an immediate liquidation scenario.
‘no wrongful trading’
The firms voluntary liquidation leaves behind more than 150 creditors and debts including hundreds of thousands owed in landfill tax and a 12.5 million liability in the staff pension scheme.
Independent Durham county councillor, John Shuttleworth, said he thought those owed money from the pension scheme may also get back around 40 pence in the pound.
‘There has been no wrongful trading and county council officers on the board of the company are subject to the same legal duties and responsibilities as all other directors’
Don Mclure, corporate director of resources, Durham county council
Commenting on the liquidation, he said: I dont think the council has been up front about the company. It is total mismanagement, which boils down to having the wrong people in the wrong jobs.
Mr Shuttleworth added: Every other waste company is making money the council may try and hide it but this is something that needs investigating.
But, Durham county council which is itself owed more than 2,500 by the company said there had been no wrongful trading.
Don McLure, Durham county councils corporate director of resources, said: The company is now in the process of voluntary liquidation and the outstanding creditors will have made a claim through KPMG who is the liquidator. There has been no wrongful trading and county council officers on the board of the company are subject to the same legal duties and responsibilities as all other directors.
Creditors
The firms creditors include Hartlepool waste management company Niramax Group Ltd owed more than 900,000 and York waste management company Harpers Environmental Ltd, which is owed more than 65,000.
A subsidiary of Derbyshire-based firm HW Martin Waste Ltd, Premier Waste Recycling Ltd, is another of now-liquidated Premier Waste Managements creditors and is owed more than 155,000.
Premier Waste Recycling Ltd was formed in April 2011, after HW Martin acquired the collections operations and Washington materials recycling facility (MRF) of Premier Waste Management Ltd.
In May 2013, the county council awarded a 24 million five-year contract to HW Martin Waste to operate the countys 13 waste and recycling centres, with subsidiary Premier Waste Recycling Ltd operating the transport from the sites (see letsrecycle.com story). The 13 sites were previously operated under the DCWM contract.
Prior to the appointment of liquidators, 11 employees of Premier Waste Management were made redundant, with around 50 of the firms staff transferring to the countys new waste and recycling contractors. According to KPMG, the 11 staff who lost their jobs worked on the aggregates processing site or in administrative roles, which were not transferred.
Contract
Under the county councils previous contract with DCWM and Premier Waste Management, non-recyclable waste was sent to landfill, but the council has set a target of diverting 75% of household waste from landfill and a recycling rate of 50% by 2020.
The eight-year contract awarded to SITA UK in February which also has an optional four year extension will see the majority of Durhams household waste treated at the firms Teesside energy-from-waste (EfW) incinerator. Construction of the 390,000 tonnes per year capacity plant is expected to be completed later this year.
Some waste will also be treated at SITAs mechanical biological treatment (MBT) facility at Byker, where it will be used to create compost for land remediation or turned into refuse derived fuel (RDF).
Outside the SITA and HW Martin contracts, some of the councils waste and recycling services previously operated by DCWM and Premier Waste Management are going in-house. The council is taking over the running of environmental monitoring services, the countys Coxhoe landfill site and Thornley Crossings, Heighington Lane and Annfield Plain waste transfer stations.
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