Two companies set up in the wake of the demise of autoclave operator Sterecycle Ltd have fallen into administration with combined debts of more than £8 million, resulting in more than 100 redundancies.
Howard Smith and Jonny Marston of KPMG were appointed joint administrators of Leeds Recycling Limited and Waste Recycling and Diversion (WRD) Limited – both owned by Andrew McGee, formerly the director of now-defunct firm Euro Dismantling Services Ltd – in September.
The administrators’ proposals to the creditors were approved on November 26 2014 and the two companies – both based at a site on Sheffield Road in Rotherham owned by Mr McGee where Sterecycle was previously based – are now being wound down.
Leeds Recycling provided waste collection services to local businesses, but had experienced ‘disproportionate operating costs on its customer collections business and an inability to attract new customers in the local South Yorkshire area’, resulting in the firm incurring ‘substantial losses’ since it commenced trading in April 2013, according to a KPMG report.
And, KPMG claims that in an attempt to reduce operating costs prior to the appointment of administrators, Leeds Recycling Ltd sold its collections business in September 2014 to Biffa Waste Services, which is responsible for waste collections going forward.
Leeds Recycling owes £2,575,714 to creditors, £871,207.08 of which is owed to company director Mr McGee.
Meanwhile, WRD was incorporated in March 2008 and began trading in March 2013 to process recycling for local authorities and businesses. It now owes £5,670,809 to creditors, of which £3,846,306 is owed to company director Mr McGee.
Overall, Mr McGee accounts for more than half (£4.71 million) of the total owed by both companies to creditors.
KPMG anticipates that secured and preferential creditors of both firms ‘may be paid a dividend’, but that it is highly unlikely that there will be a dividend paid to unsecured creditors
According to KPMG, the majority of the 112 staff – 48 workers at Leeds Recycling Ltd and 64 at WRD – were made redundant on appointment of the administrators, while a small number of staff from both companies were retained temporarily to assist KPMG with the wind down of the business.
In a statement issued upon the firm falling into administration, Howard Smith, associate restructuring partner at KPMG, said: “The companies experienced significant cash flow difficulties in recent months and were unable to meet their financial commitments. We have staff on site to assist employees with submitting their claims to the Redundancy Payments Office and to help with any queries.”
Sterecycle fell into administration and closed in 2012 following an explosion at the Sheffield Road site owned by Mr McGee in January 2011. The incident resulted in the death of one employee while another was seriously injured.
Three former employees of Sterecycle were acquitted of manslaughter last month (see letsrecycle.com story). The company itself was ordered to pay fines totalling £500,000.
After the demise of Sterecycle, the three autoclaves were abandoned and passed on to the landlord of the site Andrew McGee – formerly of Euro Dismantling Service (EDS) – who, as owner and director of WRD Group, subsequently set up Leeds Recycling Ltd at the same site.
Waste Recycling and Diversion is part of the WRD Group, which is still trading and encompasses two other subsidiaries: Waste Recycling and Destruction and Waste Recycling and Digestion, the latter of which is now listed as ‘non-trading’.
Mark Leivers, managing director of WRD Group, told letsrecycle.com in April 2013 (see letsrecycle.com story) that the company was “very ambitious” and had spent around £2 million on cleaning up and renovating the former Sterecycle site, with plans to develop a 200,000 tonnes of waste per year capacity materials recycling facility (MRF).
Mr Leivers said at the time that two of the Sterecycle autoclaves had been scrapped, and that the third was also likely to be scrapped after WRD failed to find a buyer for the equipment, which had used a combination of steam and pressure to break down the organic content of waste
WRD Group also had aspirations to build a network of up to eight anaerobic digestion (AD) facilities in the UK.