The future of the Welsh Government-subsidised plastics bottle recycling plant in Blackwood, South Wales is in severe doubt, after the High Court ordered Viridis Plastics UK, the owner of the plant, into liquidation.
As reported by letsrecycle.com in January, the plant had been closed since late December 2012 as Irish-owned Viridis had sought to financially restructure its operations to enable it to run the plant at a profit (see letsrecycle.com story).
Viridis acquired the plant in May 2012 aided by repayable finance from the Welsh Government, after the previous owner Plastics Sorting Limited was placed into administration in February of the same year (see letsrecycle.com story).
In April 2013, Judge Welch at the High Court in Newcastle upon Tyne ordered that the company be wound down, following an application from Lincolnshire-based bottle recycler ECO Plastics, which claimed that it had failed to pay debts in excess of 30,000 for coloured PET bales delivered to the Welsh plant in late 2012.
As a result of the ruling, Viridis Plastics UK was placed into compulsory liquidation last month, with the governments Liquidation Service appointed as the receiver.
A spokesman for the Insolvency Service, said: A notice of appointment will be published shortly and creditors will be asked to send a proof of debt. We have already met with the directors of the company to establish how many creditors are owed money.
Welsh Government
Creditors including the Welsh Government and the recycling social enterprise Cylch, which helped establish the plant, are likely to lose out on money.
‘I am pleased the Welsh Government is supporting Viridis Plastics with repayable business finance to ensure that the Blackwood facility achieves its full potential and becomes a leader in the sector.’
Edwina Hart, former Welsh business minister, speaking in May 2012
A Welsh Government spokesperson said: “We are in continued contact with the company and will be looking to ensure that funds are recovered in line with normal procedures.”
The plastics recycling facility was first opened in April 2010, and was set up with around 1.3 million funding from the Welsh Government, as well as a loan of 625,000 from the Kent-based Charity Bank. Upon opening in 2010 it was hailed as a landmark investment and was at one time described as the largest sorting facility for PET bottles in the UK.
Industry sources claim that a number of difficulties had arisen at the plant including equipment, operations and the relatively small scale of the facility.
Despite the plant failing the first time around, Wales former business minister Edwina Hart said in May 2012 that the acquisition of the facility by Viridis would enable it to achieve its full potential and become a leader in the sector.
Viridis then managing director Gregg Twomey said the company had committed to a major long term investment in the plant, and that it hoped to become one of the industry leaders in the development of recycled PET.
Time
Speaking to letsrecycle.com this week, the companys current director, Irish businessman Padraig Shine, commented that Viridis had not been given adequate time to recover by its creditors following difficulties in late 2012.
He said: I took over Viridis Plastics to restructure it in mid November last year and I regret that I was not given the time by some creditors of Viridis Plastics to affect my plan which would see the company continue and provide the creditors with a return.
However, explaining the decision to submit the winding up order to the courts, Jonathan Short, managing director of ECO Plastics said that the debts had dated back to November 2012 and Viridis had been given several months to pay.
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He added: They (Viridis) reinvented themselves to process and sort coloured PET and produce a flake. The plant does not have enough sorting capability on the front end so cant sort effectively and it is quite a small plant so there is not enough economies of scale. It was a very inefficient operation. Not much changed after it was taken over.
I want the industry to be successful but this is a very difficult industry to be successful in. Plants like that cant succeed. We need more modern and scaleable plants to make the industry a success. I would be very surprised if someone else comes in or has another go at it.
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