The company, which was wound up on Friday, stockpiled tens of thousands of tonnes of recycling at rented sites

This article is more than 1 year old

This article is more than 1 year old

Landowners across Victoria are facing a multimillion-dollar clean-up bill after the discovery of tens of thousands of tonnes of previously unknown recycling stockpiled at sites rented by failed company SKM.

On Friday, creditors of SKM Corporate, which leased the sites and is at the centre of a recycling crisis gripping Victoria, obtained orders from the state’s supreme court liquidating the company.

Following fires at its properties and a series of bans imposed by the Environment Protection Authority that the company said crippled its operations, SKM last month told 30 local councils it could no longer accept about 300,000 tonnes a year of recycling.

Recycling crisis escalates as another Victorian recycling firm gets waste ban Read more

Under a state government contingency plan, up to 60% of that recycling is being sent to landfill, with the remainder being handled by other industry players.

On Friday, shortly after the court appointed David Ross, of Hall Chadwick, to liquidate the company, the Commonwealth Bank, which is believed to be owed about $50m, moved to protect its position by appointing Brendan Richards and Peter McCluskey of KPMG as receivers.

It is believed about 60,000 tonnes of recycling is stored at properties rented from parties not associated with the family that controls SKM, on top of 10,000 tonnes stored at SKM’s facilities, which the company also leased.

Action taken by Ross on Monday means landowners are now potentially on the hook to pay to send all 70,000 tonnes to landfill at an estimated cost of more than $10m.

SKM Corporate is just one of about 10 companies that together operated as the SKM group.

It is believed to have few or no assets and, after laying off about 15 workers shortly before Ross was appointed, no employees.

Satellite view of the SKM Recycling facility Satellite view of the SKM Recycling facility in Coolaroo, Melbourne in February 2015 and March 2017, showing apparent buildup of recyclable waste.

The Commonwealth Bank is expected to appoint receivers over most or all of the remaining companies in the SKM group by the end of the week.

On Monday, Ross used a provision of the law allowing liquidators to disclaim onerous property to void the leases over 12 properties.

The properties include SKM’s headquarters in Melbourne suburb Laverton North and the company’s Tasmanian depot, but also take in locations in western and northern Melbourne.

“They stored some of their recycling at these premises,” Ross told the Guardian.

He said that if he had not disclaimed the leases he would have been personally liable for the cost of cleaning up the mess.

“As the bank has appointed over the assets I am totally unfunded at this point,” he said.

He said he empathised with landowners who now face unexpected clean-up bills.

“If it was me I wouldn’t be ecstatic either,” he said. “That’s why I’m trying to deal with the EPA to see if there is something they can do, but I haven’t heard back from them.”

An EPA spokesman said the agency had spoken to both Ross and the receivers.

Ross said creditors were likely to be owed far more than the $5.5m claimed during the court proceedings.

In addition to the CBA, Westpac is also a lender to a company in the SKM group, but it is believed to be owed less than $10m.

A CBA spokesman said that before appointing receivers to SKM the bank had “been working closely and cooperatively with this customer for an extended period of time”.

Richards said KPMG would work “closely with state and local governments to minimise the impact to the community and to provide certainty to all stakeholders.”

For the over 30 Victorian councils affected by SKM’s insolvency, Friday’s decision was not unexpected, but they are still working through a solution. While some have made contingency plans with some of SKM’s competitors to fill the gap, at least half are believed to still be sending recycling to landfill.

City of Melbourne confirmed on Monday it was sending 45 tonnes per day of recycling to landfill since SKM stopped taking the city’s recycling.

SKM to be wound up and 280,000 tonnes of recycling could end up in landfill Read more

The Municipal Association of Victoria president, Cr Coral Ross, said in an update this week that before the court ruling she met with the environment minister, Lily D’Ambrosio, to seek support from the state government to increase capacity at non-SKM facilities, and for more assistance when the recycling does need to go into landfill.

Satellite view of the SKM Recycling facility Satellite view of the SKM Recycling facility in Laverton, Melbourne in February 2017 and December 2018, showing apparent buildup of recyclable waste

“Where councils have to send to landfill as a last resort, we are seeking for the state to provide some relief on the landfill levy and funding assistance for additional transport costs incurred as a result of the shutdowns,” she said.

The councils involved are pushing for the introduction of a container deposit scheme, which has been ruled out by the government, and a number of other changes to help fix the recycling system.

The changes would include more recycling facilities in Victoria, better regulation of the recycling companies, and investigating separating glass out from the rest of kerbside recycling materials to reduce contamination.

Meanwhile, the Metropolitan Waste and Resource Recovery Group is advancing plans for 60 councils to form 11 clusters and embark on collaborative procurements to offer large contracts to market for recycling in the state. Expressions of interest will go out this month, with contracts expected to be in place by June 2020.