However, the administrators appointed at Yes Recycling, Grant Thornton, explained that a sale of the company’s assets is “still possible” despite the process falling through recently. The sale of the assets will be used to pay those owed money.
The report said any return to creditors at this stage is “unknown” until the process is complete. Among those owed money are Morrisons, owed more than £850,000 through a loan it provided, £276,000 to HMRC and £1.4 million to Ecosurety and Nestle.
Yes Recycling owned a 15,000 tonnes per year capacity soft plastics plant in Fife. In November 2021, supermarket chain Morrisons acquired a “significant stake in the plant” and declared it open in February (see letsrecycle.com story).
However, the company was placed into administration in April because of “cash flow challenges” brought on by the plant “not being able to operate at full capacity” (see letsrecycle.com story).
We remain in discussions with interested parties
- Grant Thornton
Sale collapse
In a progress report published yesterday (14 June), Grant Thornton detailed further why the company was placed into administration and the steps it has taken to try and sell the company.
Six formal offers were received for the business and/or assets of the company. Three to acquire the entire business and three just for the assets.
One bidder was then able to pay a commitment fee of £125,000 and their offer was taken to the next stage. However, during discussions, the bidder advised that its funding partner “had withdrawn from supporting them with the sale process”.
As no other party was able to pay the commitment fee, the joint administrators had “no option” but to make all employees redundant on 5 June 2023.
However, the report said: “[We] remain in discussions with interested parties with the aim of achieving a sale of the assets. We will provide an update on the sales process in our next report”.
Collapse
The report also detailed more information provided by the directors of Yes Recycling as to why the company collapsed.
One of the reasons was that the quality of feedstock provided by Fife council was “considered lower than specified in the supply agreement”. This resulted in “additional time and resources required to sift through the waste prior to production”.
The company also obtained an unsecured loan, detailed in the report to be from Morrisons, which was required to be paid back through PRNs, which was set at a fixed priced. This meant the company could not “benefit from the increased value” of PRNs.
Total unsecured creditors are estimated at £9.0 million
- Grant Thornton
Creditors
As the sale and assets have not gone through, the value of them can only be estimated.
The report explained that the directors “have not yet provided a statement of affairs. However as per the company’s books and records, total unsecured creditors are estimated at £9.0 million”.
The company’s assets have been given a net book value of £5.5 million, with £4.39 million of this made from plant and machinery.
Soft plastics
When announcing the facility open, Morrisons said the facility will use soft plastic to create EcoSheet, which Morrisons described as an “environmentally friendly alternative to plywood”.
The co-owner of Yes Recycling, Omer Kutluoglu, said in February when opening the plant: “Our new ‘next-generation’ recycling plant, which we’ve developed over the last seven years, is designed to tackle exactly these materials. It is a blueprint for the future and will help to kick-start the UK’s plastics recycling industry. It will mean we can keep plastic in our own country’s ‘circular economy’ and out of our seas and oceans.”
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