Victorian councils are scrambling after troubled recycling giant SKM announced it would immediately stop collecting recyclable materials.

The Melbourne-based company – which has contracts for kerbside waste collection with more than 30 Victorian councils – on Thursday night contacted local governments to inform them it would immediately stop accepting recyclables.

The courts on Wednesday gave SKM Recycling a lifeline to sort out its debts. Credit:Craig Abraham

The shutdown comes a day after the Environment Protection Authority ordered another SKM-linked company, Glass Recovery Services, to stop taking material at its Coolaroo plant.

The EPA found the glass coming into the GRS site was contaminated, and that it proved an unacceptable fire risk.