And, while creditors of ECO Plastics are currently being contacted by administrators at Grant Thornton LLP, a new separate company trading as Plastics ECO Ltd has been set up under Aurelius to take over operation of the Hemswell plastic bottle recycling facility in Lincolnshire.
It is understood that Aurelius acquired the staff, business and assets of ECO Plastics Ltd, which have moved to newly-incorporated Plastics ECO Ltd.
Administrators Grant Thornton confirmed that ECO Plastics had been placed into pre-pack administration before its business and assets were sold, and that proposals for how the company’s debts would be managed would be put forward in January.
It is not yet known how much is owed to creditors with a spokeswoman for the company yesterday declining to comment on the issue, stating that it was a “commercially sensitive” matter.
ECO Plastics had been seeking a buyer after being affected by a downturn in the PET market, and it was announced on Friday (December 12) that Aurelius had acquired the firm and would provide both financial support and “highly specialised operational improvement capabilities” (see letsrecycle.com story).
Pre-pack
Documents reveal that directors at struggling ECO Plastics filed a notice of intention to appoint joint administrators David Michael Riley and Joseph Peter Francis McLean of Grant Thornton LLP on November 28 2014 – two weeks prior to the Aurelius deal.
As part of this arrangement, an interim moratorium was put in place preventing creditors from presenting a winding-up petition against the firm. Pre-pack administration allows business to continue at a company while a plan and contract is drawn up for its sale.
ECO Plastics’ board of directors resolved unanimously to appoint the joint administrators from Grant Thornton LLP at a meeting on November 28. According to minutes of the meeting, chair of the board William Reeves noted that the company ‘was likely to become unable to pay its debts within the meaning given to that expression by Section 123 of the Insolvency Act 1986’.
ECO Plastics
ECO Plastics has had investment in the £15 million Hemswell plant – which was reopened in 2010 after being hit by a major fire the year before – from the Waste & Resources Action Programme (WRAP), which provided a £1.15 million loan, and Coca Cola Enterprises (CCE).
The Hemswell facility is capable of sorting around 150,000 tonnes of waste plastic bottles per year – which represents around 35% of the total bottle recycling capacity in the UK each year.
The £5 million investment from CCE came as part of the Continuum Recycling venture, which was set up to provide CCE with the recycled plastic needed to meet its pledge to include 25% of the recycled plastics in its bottles.
However, after the acquisition was announced last week, Coca Cola Enterprises (CCE) revealed that it had decided not to continue with the joint venture, and had instead entered into a “long term agreement” to source rPET from the company.
Jonathan Short
The Aurelius acquisition last week was welcomed by ECO Plastics’ founder and deputy chairman Jonathan Short – who is also the current chairman of the Resource Association – as a “vote of confidence” in the future of the firm.
A high profile figure in the recycling industry, Mr Short was earlier this year announced as a finalist in the entrepreneur category at the National Business Awards 2014. He was also previously appointed as an Industry Champion for the Department for Business Innovation and Skills’ (BIS) ‘Make it in Great Britain’ campaign.
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