SKM Recycling faces receivership fight amid fears of waste crisis for more than 30 councils

Thousands of tonnes of recycling from more than 30 councils would go to landfill if controversial industry giant SKM Recycling goes under. It comes after a disastrous period for the company, which included several fires at its Melbourne depots.

Kerbside recycling across Victoria faces an unprecedented crisis with a controversial waste giant on the brink of collapse.

Thousands of tonnes of waste from more than 30 municipalities — including Darebin, Port Phillip and Geelong — would be sent to landfill if SKM Recycling is forced into receivership after a disastrous period including several fires at its Melbourne premises.

The Sunday Herald Sun can reveal six companies are pursuing SKM for debts totalling $4.3 million, and want the business declared insolvent if it does not pay up.

It comes after SKM’s Laverton North depot was shut down this week for the second time in five months, leaving councils in the lurch as the environmental watchdog declared it was unsafe to add to its waste stockpiles.

Waste stockpiles at SKM’s Laverton North facility. Picture: David Crosling

Industry and government figures are fed up with SKM’s “cowboy” behaviour but fear the recycling industry would be unable to cope if it went bust.

Supreme Court documents show the company is working on a lifeline, with negotiations underway for an investor to take over SKM, pay off its debts and inject tens of millions of dollars needed to improve its troubled facilities.

The Sunday Herald Sun has also learned SKM is facing multiple workplace safety charges related to worker injuries.

WorkSafe slapped several notices on the company last week, demanding it fix health and safety issues, including inadequate machine guarding.

Environment Minister Lily D’Ambrosio said SKM’s latest “safety failure” — a fire at Laverton North on Monday — “shows why we need to encourage new players into the recycling industry”.

Court documents reveal Tasman Logistics Services has allegedly been owed $3.36 million since May last year.

It launched a Supreme Court bid last month to have SKM wound up “on grounds of insolvency”, with five other companies joining the action, seeking six-figure debts of as much as $443,167.

But SKM’s lawyers maintain the company “will be able to pay its debts within a reasonable time relative to the nature and amount of its debts”.

Thousands of tonnes of recycling could end up in landfill if SKM goes into receivership. File picture

Victorian Waste Management Association chief Peter Anderson said there was “no contingency in place” if SKM went into receivership and recycling waste would “all go to landfill”.

“The SKM issue highlights what’s gone wrong because councils have gone for the cheapest option,” he said.

“Time and again, SKM have proved they should not be taking our waste.”

More than 22,000 tonnes of recycling waste was sent to landfill when the company’s Coolaroo and Laverton North facilities were shut down by the Environment Protection Authority for a month earlier this year.

The EPA last night withdrew an official notice, issued on Wednesday, banning the recycler from accepting new waste at its Laverton North facility.

In an affidavit, SKM’s lawyer Timothy Puget said Deloitte had been trying to find “prospective financiers” since April.

He said SKM — which employs more than 300 people — signed a term sheet on June 28 for a “proposed purchaser” to provide money to “satisfy its secured creditors”, as well as deliver a $40 million loan for ongoing capital works.

Mr Puget said “highly confidential” agreement would also give the purchaser “100 per cent of the SKM Group assets and liabilities or 100 per cent of the shares of companies in the SKM Group”.

The settlement is expected to be locked in by the end of next month, according to Mr Puget, with the insolvency case to return to the Supreme Court later this month.

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Ms D’Ambrosio said: “We’ve invested $135 million to boost recycling, diversify the market and help councils to renegotiate contracts to get better deal for ratepayers.”

Bradbury Industrial Services — the company behind one of the state’s largest toxic waste stockpiles — also collapsed this week.

Bradbury was seeking an insurance payout following a toxic inferno at its Coolaroo facility. Creditors are meeting this Thursday while the administrators investigate the situation.

The company had been seeking an insurance payout following the blaze.

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