Euro Closed Loop placed into administration
Euro Closed Loop Recycling has been placed into administration just a year after its predecessor Closed Loop was rescued in a pre-pack administration agreement.
Jason Elliott and Craig Johns of Manchester-based Cowgill Holloway Business Recovery have been appointed as administrators to the company, and are expected to seek buyers for the equipment currently mothballed in the company’s London recycling plant.
Dagenham-based Closed Loop, the UK’s biggest producer of recycled plastic for milk bottles, first called in administrators in April 2015 after ‘unprecedented challenges’ caused by competition from overseas buyers and the drop in the price of oil, which made virgin plastics cheaper than recycled plastics.
Since 2008, Closed Loop Recycling had produced food-grade recycled polyethylene terephthalate (PET) and high-density polyethylene (HDPE) from plastic bottle waste, with its plant in Dagenham reprocessing 65,000 tonnes per year of mixed plastic bottle waste that would otherwise be exported for recycling, or sent to landfill. In 2012 the company announced plans to invest £12 million in doubling the size of its facility.
Euro Capital, an investment company based in Dubai, bought the company in a pre-pack arrangement in May 2015 and reportedly pledged ‘an ongoing investment programme to support the business’. Following the sale, the company was renamed Euro Closed Loop Recycling Ltd.
David Dunckley, partner in restructuring at accountancy firm Grant Thornton, which handled the administration, said at the time: “The sale to Euro Capital will see the transfer of employees and give Closed Loop the financial resources to stabilise itself and start capitalising on its well-known brand in a marketplace where sentiment and volumes are improving.”
Despite the takeover however, the new company’s Director, Afzal Majid, warned that it was ‘on the brink of closure’ in July 2015, just two months after it was bought. In a letter to UK recycling industry stakeholders he said that the company was ‘facing considerable difficulties regarding the continuing viability of the business’ and losing at least £300,000 a month. As a result, 32 staff were laid off from the Dagenham bottle recycling facility and a further 12 had working hours cut, with the plant moving to a four-day working week.
The owners had said that they had been unable to find a price for the recycled HDPE product that could compete with virgin plastics, which it said had become significantly cheaper to produce.
Chris Dow, who was retained as Chief Executive of Euro Closed Loop following the takeover, said that the company was in discussions with ‘all parts of the supply chain’ to find support for recycled plastic packaging and prevent closure. Among the measures he was seeking was parity between recycled plastic and virgin resin pricing, a ‘supportive supplier base’ and support from stakeholders to implement a sustainable model.
Prior to going into administration, Closed Loop stated that if businesses would pay 0.1p more for each two-pint plastic milk bottle, it would secure the future of the company. The marginal increase in the price of milk was supported by a majority of respondents to YouGov poll, which found that 68 per cent of people would pay more for milk in recycled packaging. However, there had been little movement from the dairy and retail industries in reverting to recycled plastics.
Although the company had sought a new buyer for the plant, the plant was fully shut down shortly after the initial layoffs, and the remaining staff, including Dow, were laid off. The Dagenham plant was mothballed and the machinery held within it, used to sort, granulate and wash plastic milk bottles, will now be dismantled and sold.