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May 17, 2016 07:00 AM

Euro Closed Loop goes into administration

PRW
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    Closed Loop opened its 35,000 tonnes-a-year milk bottle recycling plant in 2008 and had been seen as one of the flagship recycling facilities for the plastics sector.

    Closed Loop opened its 35,000 tonnes-a-year milk bottle recycling plant in 2008 and had been seen as one of the flagship recycling facilities for the plastics sector.

    Euro Closed Loop Recycling, the company which was formed following the takeover of the Dagenham-based Closed Loop plastic milk bottle recycling facility, has been placed into administration.

    The news comes almost 12 months after Closed Loop – which was the biggest UK supplier of rHDPE for use in the manufacture of milk bottles – was acquired by the Dubai-based investment firm Euro-Capital in a pre-pack administration agreement.

    Closed Loop opened its 35,000 tonnes-a-year milk bottle recycling plant in 2008 and had been seen as one of the flagship recycling facilities for the plastics sector.

    The company was then bought after having posted losses due to challenging trading conditions in early 2015. The takeover saw the company's founder, Chris Dow, leave the business.

    Shortly after having bought the company, which then began trading under the name Euro Closed Loop Recycling, the new owners scaled back operations at the Dagenham bottle recycling facility, claiming that the plant was losing around £300,000 (€291,000) per month.

    The owners had claimed that they had been unable to find a price for the rHDPE product at a level that could compete with virgin plastics, which it was said had become significantly cheaper to produce in the wake of the oil price slump.

    Back in July 2015, PRW revealed that Euro Closed Loop was understood to have accepted a preferred bid for the business.

    This was after Euro Closed Loop director Afzal Majid had written an open letter to stakeholders on 6 July which said that existing operating conditions were not sustainable. Majid revealed that 32 staff had been laid off on 29 June and a further 12 had had their working hours cut, with the plant on a four-day working week as it coped with losses of £300,000 (€291,000) per month. Then on 8 July the firm's owners warned the company was likely to stop production and lay off remaining staff at the site.

    Industry website letsrecycle.com suggested a deal ultimately fell through as buyers were unable to reach an agreement with the owners over the value of the plant. With no deal for the facility materialising, the plant was shut down and staff were laid off.

    Jason Elliott and Craig Johns of Manchester-based insolvency firm Cowgill Holloway Business Recover appointed as administrators at the end of last month and are likely to continue to seek a buyer for the optical sorting, granulation and washing machinery used in the plant.

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