EXCLUSIVE: Administrators for the East London plastic bottle recycler Ecotech have ended their search for a buyer for the business, after it was found that ‘significant hurdles’ were in the way of operations at the Rainham site.
Ecotech London Ltd, which operated from premises at the Fairview Industrial Estate, was placed into administration in June after having closed its gates following a difficult period of trading (see letsrecycle.com story).
The £6.5 million plant was set up with financial help from LWARB.
Insolvency practitioners Charles Graham John King and Robert Hunter Kelly of Ernst & Young were brought in to oversee a potential sale of the business, with a view to reopening the site.
However, Charles King has confirmed to letsrecycle.com that despite some expressions of interest, a sale of the business had not been possible due to ‘key factors’ preventing a sale from going forward.
Costs
These included limited timescales available to turn a deal around – with the company’s continued occupation of the site incurring significant costs.
The administrator added that a sale would have been further challenged by the significant capital required due to creditor balances that had accumulated.
“We have now commenced the process of writing to preferential creditors (i.e. the former employees) of the Company to notify them that we will shortly be paying a dividend to them. These claims relate to accrued holiday pay balances and it is anticipated these claims will be paid in full.”
Charles King
Joint Administrator
And, it was also claimed that any potential purchaser would have struggled to obtain ‘sufficient comfort’ to transform the operation into a profitable enterprise.
As a result Mr King confirmed that the company has ceased occupation of the site, with the landlord liaising directly with interested parties in plant and equipment left on the property. All 39 staff had been made redundant prior to the administrator’s appointment.
Creditors
Mr King added: “We have now commenced the process of writing to preferential creditors (i.e. the former employees) of the Company to notify them that we will shortly be paying a dividend to them. These claims relate to accrued holiday pay balances and it is anticipated these claims will be paid in full.
“The process of eliciting and agreeing unsecured creditor claims has not yet commenced. Unsecured creditors will be invited to submit their claims once the outcome of the asset realisation process becomes clearer and they will be written to separately in this regard.”
Ecotech chief executive Javed Mawji could not be reached for comment when contacted by letsrecycle.com.
Capacity
With capacity to process about 18,500 tonnes per year of clear PET and mixed plastic bottles at the Rainham facility, Ecotech was able to produce a clear PET plastic flake which was extruded for use in the production of food-grade plastic packaging.
PET flake produced at the Rainham plant
The £6.5 million plant was set up with £2.2 million in financial backing from the London Waste and Recycling Board (LWARB), as well as support from German PET recycling plant designer STF Group, which provided the sorting, washing and granulation kit for the operation.
Private investors also provided finance to the company, whilst former Shanks director Ian Goodfellow was a director.
Bottle processing carried out at the facility involved taking PET and mixed plastic bottle bales through a series of decontamination and washing steps, which is then used to produce high-purity hot-washed PET flakes.
The company is among the latest in a string of plastics recycling businesses to encounter financial difficulties, following what has been a turbulent period for the plastics sector. High profile casualties also include Closed Loop Recycling, the Dagenham-based milk bottle recycling firm which closed its doors in 2015, but was revived by resources firm Veolia.
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